Sunday, November 08, 2009

A Look at Weakness Among New 20-Day Highs and Lows

On the radar: we see generally rising prices for the S&P 500 Index (SPY; blue line above), but a recent pattern of weakening 20-day highs minus lows among NYSE, NASDAQ, and ASE stocks, as reported by the excellent Barchart site. Much of that weakness can be traced to relative weakness among small cap stocks. For example, my ever-trusty Decision Point service notes that 58% of S&P 500 large cap issues are trading above their 20-day exponential moving averages, but only 38% of S&P 600 small caps and 45% of S&P 400 midcaps. I will be watching closely early this week to see if the market bounce from recent lows can broaden. If not, I will be viewing that bounce as part of an longer-term topping process that goes back to momentum highs in September.