Better, Yet Worse

The market's failing its test at Dow 10,000 thus far, Helene Meisler says.
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As I sat down to watch the Monday morning opening, I heard the folks at

CNBC

telling me

Amazon.com

(AMZN) - Get Report

was a stock to watch, as the company was entering

eBay's

(EBAY) - Get Report

auction business. I figured the stock would zoom ahead, up who knows how much on the day. Figured the chart would look spectacular when I posted it. It opened up 10.

Nasdaq

opened up about 25. The

Dow

opened with almost triple digits, up about 70 or so. And the advance/decline line? Plus 700! Not bad, I told myself.

With just over an hour to go before the close, I found myself staring at the tape, rubbing the sleep from my eyes. Could it be? Nasdaq was up 60, the Dow had tacked on another hundred, and Amazon.com was still up 10. This didn't seem right, so I waited for the market summary to pass by on the screen. Surely the A/D had improved even more since the open. No way. In fact, it had indeed gotten worse; it was now only plus 600.

This is all part of the market's test up here. So far, it is failing that test.

Very little has changed in the cumulative A/D line since last Thursday. Between Friday's decline and Monday's comeback, this indicator has tacked on a meager 345 vs. the Dow's 170 points and the

S&P's

20. I'm not impressed. But you knew that. That's old news to anyone and everyone who watches the market these days. But what about the upside/downside volume? Hasn't that been much better than the A/D? I get that question quite a lot these days, so I decided to have a closer look.

Looking at the cumulative upside/downside volume, we can see that it is in fact better than the A/D line (it would be pretty awful if it weren't!), but it still has not made a new high. You can see the peak reading in early January, with the failing rally in mid-March. Yesterday's very decent ratio left this indicator about 160 million shares away from that March high, not too difficult to surpass if the rally continues, but still more than a billion shares from its January peak.

To stay with the volume, we can also look at an overbought/oversold oscillator using volume. I've calculated the overbought/oversold oscillator using the upside/downside volume, modifying only slightly the same method I use to calculate that oscillator using the A/D. It too is moderately oversold, but also well off its March peak, showing less momentum on this rally.

And finally, still on the volume theme, as this market has rocketed up in the past few days, total volume has slowed.

To sum up where volume stands: It's better than the A/D, but not impressive enough to say that this rise to new highs in the Dow is sustainable.

And it is only new highs in the Dow. Did you happen to notice that the S&P, even after this rally, is still nearly 10 points from the high it made two weeks ago? So, now if you took a blank sheet of paper with two columns, one titled "new highs" and the other "no new highs," there'd be only one in the "new highs" list -- that would be the Dow alone. On the other side of the page, we would list Nasdaq, S&P, Transports, Utilities, Financials and

Russell 2000

, among others. Maybe that's why the number of stocks at new highs is only half of what it was on March 11, when the Dow was at 9897. These are negative divergences.

As for individual stocks, Merger Monday seems to have brought out sellers in many names, not buyers. To that point,

Bristol-Myers

(BMY) - Get Report

is a very interesting chart. This chart made a high in early January around 68. Down it came in the January correction. The next rally only made it to 67; it backed off, tried again and only made it to 66 before sliding again. In the recent slide from 66, Bristol has traded more than 5 million shares many days. Yesterday's news of a potential merger with

Glaxo

(GLX)

gave a strong showing in price (albeit still not over 66, let alone 68), but volume was only 4 million.

Bristol may very well continue higher, driven by merger news, but I must ask myself why only 4 million shares and why not through 66 on such good news? The answer I come up with is that it's already overowned and investors would rather take profits into that news than chase it on the hope that the merger is for real. Individual stocks make up the market statistics, so you can see how, with action such as this, these statistics are lagging so poorly

Some individual stocks that act well and have good charts include

Procter & Gamble

(PG) - Get Report

,

AlliedSignal

(ALD)

,

Alcoa

(AA) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

in the DJIA. Elsewhere,

Baker Hughes

(BHI)

had the best breakout of the oil-service stocks I chart. Its target is close to 34.

Colgate

(CL) - Get Report

is still good.

Pepsi

(PEP) - Get Report

has seen some vast improvement here, too.

On the negative side,

AT&T

(T) - Get Report

continues to back off from its 83/84 resistance level.

Citigroup

(C) - Get Report

is feeling a bit shaky in here as it keeps closing near its low of the day; this may turn into just a correction but it does bother me in here.

Xerox

(XRX) - Get Report

was up all day and closed on its low and down on the day, almost as if there were rumors around on the stock. And

Yahoo!

(YHOO)

is struggling at its recent highs here.

With the market still in oversold territory, it's likely the rally can continue. However, if it continues in such a narrow fashion, it will find it cannot sustain itself at the highs and will come back down again. Thus far, it is failing its test at Dow 10,000.

Author's note: Because the stock market is closed for Good Friday, I'll write again Thursday instead of Friday.

New Lows

Overbought/Oversold Oscillator

Cumulative Advance/Decline Line

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she was long AT&T, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at

KPMHSM@aol.com.