Saturday, August 29, 2009

Is the Stock Market Rally Fading?

The chart above tracks the number of NYSE, NASDAQ, and ASE stocks making fresh 20-day highs minus the number making new 20-day lows (red line).

Note that new highs peaked in late July in what appears to be a momentum high. At the recent price highs (SPY; blue line), we are seeing fewer stocks participating in the new highs. If this candidate transition pattern holds, we should eventually take out the August lows in SPY. (Note: I follow this and other indicators each morning before the market open via Twitter; follow/subscribe here).