Current NYSE New Highs Chart:
Two interesting things to note on Friday’s close. First the action was strong enough to turn our momentum indicator upwards which is good for the bulls and bad for the bears. The second thing to note is today’s bar-5 is that tall green bar which literally sets today’s bar at a high level with a new high requirement of 171 to maintain the 5day average at 146 or higher. So in the first 30 minutes we need to see a hew high over 80.
We are going to start paper trading off the indicator over the next month. This is experimental. We need to find the right instrument and of course our entry and exit rules. Friday’s short call was based on a new high set in the SPX with a lower New Highs value, the theory being that momentum is not present to follow through the new high on the next day. So officially we shorted the close by buying TZA .
Zweig Panel:
Today I am publishing the entire Zweig panel to show the divergence between the NYSE ZB (which is the official ZB for generating signals) and some of the other markets.
The NSYE ZB is the second down on the left. It still sits quit high and is not showing the underlying momentum loss that say the R2K indicator in the lower right hand chart shows. Even the broader base NASDAQ exchange is setting lower highs and lows. NYSE needs to show some sign of weakness in order to get our 3 to 5% correction. A quick review of the NYSE new highs show that there are a lot of preferred stocks that are hitting new highs driving the NYSE New High numbers higher. These financial instruments appear to be the underlying strength currently showing in the NYSE. So a tell will be a pullback in the banks.
