Weekend Nov 20 2021
We have noted the declines in market participation, ie breadth for some time.
Here are the number of new lows in the NASD which are hitting a new high number of new lows.
Yet the index itself is hitting new highs. The explanation is that a handful of stocks are driving the index ever higher as investors crowd into them. We noted that recently half of alll options traded were in one stock - Tesla.
the bar graph is the number of new highs and it has now reached 400. The line graph is the NASD which is at a new high.
This is an incredible divergence demonstrating herding and a concentration of ownership in fewer and fewer stocks.
Here is another measure, only 41% of the NASD stocks are over their 50 day MA.
Yet the NASD is at a new high.
NASD up while INDU continues fall in third wave
The original Dow Theory required the Industrials and Transports to move up together to give a buy signal. Now we have the INDU SPX and COMP, one could say the same about them. The INDU is not confirming the new high in the COMP as you can see above. Couple that with the preceding chart, only 41% ofNASD stocks over 50 day MA, and we have a huge divergence in the herd gathering in fewer and fewer stocks.
McClellan Summation Index
This index has been falling since June. Now it made a lower high and RSI top and PMO bottom are both rolling over. This portends lower prices.
The Big Three
Indu is moving down, COMP makes new high and SPX is in between.
Rydex Russell 2000
This index of small caps recently hit a new high, Heard on the Street in the Weekend WSJ explains why.
the top two holdings in the index are movie theater AMC and car rental Avis. The collective values of Gamestop, AMC and Avis are up 1800% more than a year ago. Again a handful of stocks disguises the overall weakness of the market.
Energy WTIC
We count five waves up on the weekly chart, so no surprise oil weakened this past week closing at 75.94.
NYSE Advance Decline
Our most reliable indicator also turned down.
Social Mood
Page B 7 Weekend WSJ reports The Art Market in Overdrive.
Last year Christie's auctioned off nine artworks for at least $25 M. They did that 14 times in the last two weeks. Chief auction houses sold $2.3 billion worth of art the last two weeks. And Sootheby's and Christie's sold the entire inventory offered, a rare occurrence.
Page A 5 has a full page color ad for the Conrad Las Vegas advertising acres of swim pools and wold class entertainment.
Big projects are planned and sometimes completed at market highs only to endure the market collapse which follows, the Empire State Building opening in the early 1930s being the classic example. I checked the website and the five reviews, some by Diamond Level Hilton patrons are uniformly negative. Total score 3.5 of 5. Others said it was not in the league with Wynn or the Bellagio. Did Paris Hilton finally assume control I wonder?
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