Summary
Was last Friday another aborted run for the roses? Coming into today's
trading, it looks like it might have been.
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Among the seven measures in my stock-market tracking group, three saw new
highs last Friday (52-week highs), but they were definitely of the marginal
variety. Nevertheless, stocks were poised to try for better things this week,
but so far, no cigar. In fact, over this week's first two trading sessions,
the tracking group is down an average 1.7% (median decline = 1.5%).
In some important technical respects, I view the close on 1/26 as
representing the stock market's last substantive highs. Therefore, I continue to use
that date as a key yardstick, and as of the end of yesterday's trading, the
NYSE Composite was the only measure in the tracking group that stood above the
1/26 close.
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SELECTED STOCK-MARKET MEASURES
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Recent Highs 03/09
03/09 ------------ 02/11 01/26 From
Close Close Date Close Close 01/26
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NYSE Comp. 6698 6780 03/05 6751 6672 +0.4%
S&P 500 1141 1158 02/11 1158 1155 -1.2%
Wil. 5000 11147 11314 03/05 11293 11282 -1.3%
Value Line 378 385 03/05 384 384 -1.6%
DJIA 10457 10738 02/11 10738 10703 -2.3%
Russ. 2000 586 602 01/26 597 602 -2.7%
NASDAQ 100 1441 1554 01/26 1514 1554 -7.3%
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Average -2.3%
Median -1.6%
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From the missive dated 2/17 ("The Markets: By the Numbers"):
"As of last Friday's close [2/13], all but the NYSE Composite stood below
... prior closing highs, set on 1/26. It certainly is too early to conclude
that [all this is] part of a 'failing-rally' pattern, but it is now on the
radar screen as something to think about. Moreover, market levels have now
emerged against which to measure such a possibility.
"On prima facie examination, the bullish camp should be in control of
things this week. There's an expiration on the immediate horizon, and these
events, by design, are meant to 'help' the equity market to higher levels.
Moreover, there is now at least a whiff of M&A mania returning to the marketplace,
with the folks appearing regularly on CNBC and other similar venues pointing to
the phenomenon as just another indication of why higher stock prices are a
given.
"Suppose, however, against this short-term bullish backdrop the market
does not cooperate? This surely would suggest the possibility that something on
the margin might be in a state of change. In turn, this is what makes this
week's performance measured against last week's levels of genuine importance."
A distribution top is something I define as a marginal event, and
marginal events often take a while to unfold. In addition, they are difficult to
detect. However, if we have a genuine distribution top in progress, the outcome
is likely to be quite punitive.
Stay tuned!
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