High/Low Logic Index
Bulls have been quick to assure us that this market “bears” no resemblance to the dot-com bust. We agree—but probably for very different reasons. Among them are the conventional breadth measures, which provided little warning of this year’s January peak. And, the initial decline off January’s top has been much broader than during the first phase of the dot-com bust.
We revisit our “Red Flag Indicator” of prior bull market tops versus today. Usually most of these internal market measures will deteriorate in advance of the final bull market peak. At the latest S&P high, three of the seven leading measures had raised Red Flags, by not confirming, but two of them (DJ Transports and the NYSE A/D Line), are within just ticks of new bull market highs.
It’s not only the electorate that’s polarized in the wake of last week’s presidential vote: Internal disparities within the stock market over the last several days have been some of the most extreme we’ve ever observed. For example, on Monday, November 14th, NYSE Daily 52-Week New Highs and Lows both exceeded 10% of Issues Traded. There’s no day that’s been even remotely comparable in almost 75 years of NYSE history.