New Highs, New Lows and Industry Strength

The New High-New Low Ratio (NH-NL) crossed into neutral territory for the first time since early October 2006. It then briefly stopped in negative territory for the weeks ending March 10 and March 17, the first time this happened since August 2006. The ratio has been volatile with direct relation to the large up and down swings of the market so don’t read too much into that action. I am watching to see if the ratio can hold steady and maintain some strength near the 60% level without dropping back to negative territory. The streak of higher highs and higher lows is now over and the consolidation phase from October to February has been snapped to the downside. The first red flag has been signaled with the violation of the support level so now look for additional red flags such as any trend that develops making lower highs and lower lows on a consistent basis.

040207_nh_nl_ratio_sm.png

Keep in mind, it was March and April 2006 that started the steak of weakness last year in this ratio and the market as a whole.

Weekly New High – New Low Ratio (NH-NL) for 2007:
Saturday, January 6, 2007: 279-67
Saturday, January 13, 2007: 344-39
Saturday, January 13, 2007: 281-46
Saturday, January 27, 2007: 316-55
Saturday, February 3, 2007: 502-45
Saturday, February 10, 2007: 558-53
Saturday, February 17, 2007: 428-48
Saturday, February 24, 2007: 556-42 – This past week (a short week)
Saturday, March 3, 2007: 187-130
Saturday, March 10, 2007: 96-125
Saturday, March 17, 2007: 114-145
Saturday, March 24, 2007: 284-53
Saturday, March 31, 2007: 227-68

Below is the latest action among the industry groups I follow to gauge market strength from one area to another:

Top 10 Rated Groups:
Steel – Specialty Alloys
Chemicals – Fertilizers
Auto/Truck – Tires
Diversified Operations
Steel – Producers
Metal Proc & Fabrication
Oil & Gas – Machinery
Food – Dairy Products
Oil & Gas – Refining
Internet – ISP

Ten Weakest Groups – Industry groups dropping the most last week:
Medical – Ethical Drugs
Bldg – Constr Prds/Misc
Bldg – Hand Tools
Metal Prds – Fasteners
Funeral Services & Rel
Household/Office Furniture
Internet – Network
Transportation – Services
Auto/Truck – Replace Parts
Auto Manufacturers

The two lists below represent the most overall strength within a sector over the past several weeks as oil and gas and electrical have started to move higher. Understandably, the tension in the Middle East with Iran has moved the price of crude north resulting in higher stock prices of related oil and gas companies.

040207_crude_monthly.png

Noticeable Group Strength:
Electrical – Parts Distributors
Electrical – Scientific
Electrical – Semiconductor Equip
Electrical – Semiconductor Mfg
Electrical – Equipment

Noticeable Group Strength:
Oil & Gas –Field Servic
Oil & Gas – Intl Expl Pr
Oil & Gas – Intl Integra
Oil & Gas – Machinery/Eq
Oil & Gas – Refining/Mkt
Oil & Gas – Transprt/Pip
Oil & Gas – US Expl Pro
Oil & Gas – US Integrat

Comments

  1. I find your hl analysis interesting and will watch to see if we get more weakness in the next few weeks. My data provider only provides a high/low ratio and not raw hl data. Do you recommend any provider to get daily and weekly raw hl data.

    Thanks,

    Wade helm

  2. Wade,
    I use the IBD newspaper, (eIBD) version, and collect the data into my own spreadsheet. I haven’t found anything better than this and I have searched from time to time.

  3. Gary Reed says:

    7-18-07
    First time viewer. Looking for reliable industry strength source.
    Will revisit before making comment.
    Gary

  4. Gary Reed says:

    8-19-07
    Still looking for a free industry strength source.
    Specifically–Motorola(MOT)

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