Tuesday, April 1, 2014

NYSE internal momentum improves

NYSE internal momentum is…starting to show signs of improving as the latest cycle bottom draws to a close.  It’s worth noting that at no time in the last few weeks did the number of stocks making new 52-week lows rise above 40.  This is a sign that internal selling pressure was contained during the March internal correction. 

There are also preliminary signs that the number of new 52-week highs is starting to expand; on Monday the new highs rose to 144, which is the highest number we’ve seen since March 18.  If this number continues to expand we’ll soon have a confirmed cycle bottom signal.  The NYSE short-term directional indicator turned up today as well for the first time in weeks.  Another 2-3 days of rising will also be interpreted as a bullish confirmation signal. 

Finally, I would bring your attention to the dominant longer-term NYSE internal momentum indicator.  This is the longest of the components of the NYSE Hi-Lo Momentum (HILMO) index, and until a week or so ago this indicator had been declining for months.  The longer-term component of HILMO isn’t as important as the dominant interim indicator or the short-term directional component, yet it’s still fairly important in its own right when it’s rising on a sustained basis.  The recent turnaround in this indicator is another technical sign pointing to a potentially bullish month of April.

[Excerpted from the Mar. 31 issue of MomentumStrategies Report]