NYSE New High New Low Extreme

The market closed last Friday registering the second most New High’s (NH’s) recorded in a database that I have going back decades. At 634 NH’s, it’s the most new highs registered on one day in almost 30 years. More than any one day during the dot com boom of the late 1990’s, more than any day recorded during the run in 1987 and more than anything this millennium.

Only one other date surpasses Friday’s total: Monday, October 11, 1982 when the DJIA closed at 1,072.79. The market recorded 653 NH’s, 7 NL’s, 1,504 advances, 292 decliners and “up” volume outpaced “down” volume by an almost 10-1 ratio.

The NASDAQ closed at 202.31 on the same day with 418 NH’s, 14 NL’s (not even in the top 10 for the highest number of NH’s ever recorded). Do note this: the highest NASDAQ reading ever came later that year on Thursday, November 4, 1982 with 525 NH’s (following that week’s election day).

042510_NH-NL_NYSE

So what does this all mean? Well, by mid-1983, the market surged higher by 20%. It continued to move higher until the crash in 1987 but long term, the market is up well over 10-fold since this NH extreme.

How about today’s market? I can only tell you this: we are in an up-trend as of today and until the market breaks that trend, do not try to “guess” when it will reverse.

I have my “opinions” of the market but as you all know, we must trade what is actually happening, not what we think should be happening. Yes, I am concerned the market would like to correct longer term based on poor economic policies, tremendous debt levels, a depreciating dollar and most important: possible inflation. But, until we get the true catalyst, trade what the market is telling you.

The 634 NH’s represents an extreme in the market and I will be watching for further catalysts. How long can this market sustain higher stock prices based on faulty growth? You can only take so many cash advances on your credit cards without paying before they cut off your borrowing capacity. Maybe I have it all wrong but I am concerned long term. Short term, the market is higher unless it says otherwise.

I leave you with this: the vast number of “gap-ups” in stocks making new highs concerns me. Do they want to fill? If so, we will have an almost endless supply of high quality shorts to trade.

Chart provided courtesy of www.Decisionpoint.com

Comments

  1. This is powerful stuff, Chris! Thanks for the historic perspective. One question, though. If and when we see a correction, how big would you say it could be in terms of historical perspective? I’ve been keeping an eye on NYA50R, but it hasn’t given any sign of a coming correction or sideways action for quite some time now and this is making me a bit nervous – if the market keep rallying like this forever, we might get a nasty correction. Appreciate your input.

    PS. I noticed that you use decisionpoint’s charts. Carl Swenlin from decisionpoint.com was interviewed by Jim Puplava this week and Mr. Swenlin gave a free trial username and password for the listeners of the show. I’m sure some of your readers would appreciate the free trial. If anyone’s interested, contact me via my website (click on my name).

  2. Kristjan,

    “keep rallying like this forever”: I know exactly how you feel. I don’t see any major technical signals either for a correction or sideways action. Currently, the trend is higher and we just have to wait. The numerous gap-ups in individual stocks making new highs is not something that I have not seen with such prominence in the past. Either I don’t remember or the market is actually giving some signals to watch out when things do change.

    Thanks for the heads-up to the free trial. I sign-in directly over there so I didn’t even notice and I didn’t hear the interview.

    Chris

  3. Love your blog Chris, quality over quantity, even though a little more quantity wouldn’t hurt. :) Your advice to let the market decide how you invest is great but for some reason people seem to think they know more than it does. Here is a great quote that is relevant to this idea:

    “I don’t believe that I am the only person who cannot predict future prices. No one consistently can predict anything, especially investors. Prices, not investors, predict the future. Despite this, investors hope or believe that they can predict the future, or someone else can. A lot of them look to you to predict what the next macroeconomic cycle will be. We rely on the fact that other investors are convinced that they can predict the future, and I believe that’s where our profits come from. I believe it’s that simple.”
    – John W. Henry

  4. biscosc,

    Thank you.

    Don’t forget to check my archives, I was once an everyday blogger with some excellent posts (that was before kids and family). I try from time to time to get a string of quality posts together but then I am sidetracked by a million things. Hopefully one day I will be back at it on a more consistent basis. Until then, follow me on twitter for shorter analysis, etc.

  5. bisosc,
    I’m with you on the ‘a bit more content’ wish list, but reading through Chris’s blog I’ve discovered that he has actually built a pretty good base for his readers to do their own analysis. I’ve kept price action on top of my list for some time now, but the market internals that Chris and others (thank you, Chris) have talked about are really something special that give you heads up over any set of indicators. New high/new low data in its various shapes and forms are something that you can look into independently without having to look for confirmation from other traders/bloggers. I’m saying this because I’ve had my share of bad trades due to relying too much on other people’s analysis (I used to look for confirmation on my trades in someone else’s analysis..). I don’t know if you’ve already gone through Chris’s previous posts, but I suggest you take a look into new high/low and other such posts. There’s great stuff at tradersnarrative.com as well.

  6. While a very interesting analysis that I’ve seen in many places since Friday it might be real interesting to look at the ratio of the number of New Highs/total issues listed.

    I may be wrong but I think there are significantly more issues listed now than in 1982. If that’s correct we may not be at an extreme at all.

  7. Bill,

    Excellent point. I am a percentage guy as well when you want a true apples-to-apples comparison. I believe that I do have this data so I’ll take a look this week and see if I can crunch a chart using %’s of total issues making NH’s.

    Chris

  8. Bill,

    I do have this when quickly looking at my NASDAQ info: 3,322 issues on 11/4/82. We average about slightly less than 3,000 in 2009 and 2010 (2,864 today). To tell you the truth, the late 1990’s had the most issues, the NASDAQ topped 5,000 in the dot come era (late 1990’s). So, the percentage comparison doesn’t skew the numbers as we would have thought.

    I don’t see the NYSE issues in my current database so I may have to run the numbers again to extract from some raw data.

  9. 674 New Highs today on NYSE, the most ever (or at least in my data going back to 1960’s).

  10. Chris – I don’t have the data either and I can’t seem to find it, however I think you’re perhaps comparing apples and oranges with NASDAQ and NYSE.
    According to the WSJ http://online.wsj.com/mdc/page/marketsdata.html
    yesterday: 3,174 Issues on NYSE 2,494 NASDAQ.

    Over the years the NYSE has added a large number of bond like issues. How many of those are on the New Highs? I don’t know :-)

    Will be interesting to see if you have NYSE data though

  11. Bill,

    I looked into that after you mentioned it yesterday and you are correct. I checked the 1980’s for NYSE and there were less than 1,500 issues, half of what they are today.

    I will (at some point) do a chart with NH’s as represented as a percentage of issues. I will also post the top NH days as well. The 674 reading is still significant, regardless. As a percentage, it’s about half due to the number of issues.

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