The Daily Chartist: The Rest Continues

For a pre-holiday treat, the Chartist responds to requests for a new feature on her charts.
Author:
Publish date:

Nov. 24, 1999

You may notice that I've included the

Dow

and

Nasdaq

charts as overlays on their respective new highs charts. They are not the clearest snapshot of this indicator, but I am responding to requests. As I've stated before, this indicator is not a good timing tool; it is a tool to show the health of the market. However, if you look on the Nasdaq chart back in the June-July period, you can see that as long as the number of stocks making new highs was on the rise, the average kept going. The peak in new highs came on June 30, but the Nasdaq average kept rising until July 16. You can see at the tail end of that Nasdaq rise how the new highs really fell off, warning us the rise is near the end.

As a timing tool, I tend to use this indicator on a 10-day moving average; if the momentum cannot better itself over 10 days, then the market is truly tired and in need of a correction. The

NYSE

10-day moving averages rolled over several days ago. The Nasdaq's had flattened out (see the Nov. 16

column), but only rolled over yesterday. For these reasons, I expect we are still in some sort of correction or resting phase.

With the Thanksgiving holiday tomorrow, I will write again Friday. Happy Thanksgiving to all Americans!

New Highs and 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 held no positions in any securities mentioned in this column, 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.