Each morning before the market open, I post 20-day new highs and lows via Twitter. For a broader market look, I like to examine the 65-day highs and lows. Above we see the new highs minus the new lows plotted against the S&P 500 Index (SPY; blue line).
Two things worthy of note in the chart: The pattern of fewer new highs and more lows as the rally has progressed and the very recent expansion of new highs. Yesterday's market registered a multiweek high in new highs, suggesting that stocks were gaining strength, not topping out here. An expansion of new highs above the level registered in early January would suggest that the bull market still has good life.
As a rule, I find that markets vulnerable to decline will show an expansion of new lows, even as overall price indexes are topping. This is particularly true for the 20-day new lows. As long as new lows across the NYSE, NASDAQ, and ASE are below 300--as was the case yesterday--the market is not displaying such vulnerability.
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