Mon, Aug 15 2011 7:58 AM ET
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NYSE AND NASDAQ NET ADVANCES
SURGE TO HIGHEST LEVELS OF THE
YEAR -- SETTING RESISTANCE FOR THE
DOW, NASDAQ AND NY COMPOSITE
By Arthur Hill
NYSE AND NASDAQ NET ADVANCES SURGE TO HIGHEST LEVELS OF
THE YEAR...Link for today’s video. The July-August decline started with a
negative breadth surge on July 27th. Charts in the Market Message for that
day showed Net Advances for both the NYSE and the Nasdaq plunging to
their lowest levels of the year. Net Advances plunged even further on August
4th and 8th. Early August breadth was the most negative of the year. Breadth
did an incredible about face with the biggest positive breadth surges of the
year last Tuesday and Thursday. Chart 1 shows the Nasdaq AD Line (gray)
with Net Advances Percent ($NAAD:$NATOT) in the indicator window. The
Nasdaq is the pink dotted line. Notice how advances off the March and June
lows started with big positive breadth surges. These surges are like the first
stage of a rocket launch. Enormous power is required to get the rocket off the
ground and establish upside momentum. Less power is needed to maintain
upside momentum after the launch. It is very unusual to see to big negative
breadth surges and two big positive breadth surges in such a short period of
time. Being the more recent, the positive breadth surges carry more weight
and suggest that this oversold bounce will extend further.
(click to view a live version of this chart)
Chart 1
(click to view a live version of this chart)
Chart 2
Chart 2 shows the NYSE AD Line with Net Advances Percent
($NYAD:$NYTOT). The NY Composite ($NYA) is the pink dotted line.
Breadth surges signaled the start of the March and June advances (black
arrows). The positive breadth surges on Tuesday and Thursday were both
above .80 (80 percent). This is because over 90% of all NYSE stocks
advanced. The rest were unchanged or declined. Keep in mind that Net
Advances equals advancing issues less declining issues. Net Advances
Percent is Net Advances divided by total issues traded. Chart 3 shows the
Nasdaq AD Volume Line and Net Advancing Volume Percent for reference.
Chart 4 shows the same indicators for the NYSE.
(click to view a live version of this chart)
Chart 3
(click to view a live version of this chart)
Chart 4
SETTING RESISTANCE FOR THE DOW, NASDAQ AND NY COMPOSITE...
On Friday I showed potential resistance levels for the S&P 500 ETF (SPY)
and Russell 2000 ETF (IWM). These were based on broken support and the
Fibonacci Retracements Tool. As an addition, I will show resistance levels
for the Nasdaq, NY Composite and Dow as well. These techniques can be
applied to any security that broke support with a sharp decline the last few
weeks. That pretty much applies to the majority of stocks right now. Broken
support and the 50% retracement mark resistance for the Nasdaq. The
resistance zone for the Dow centers around 10700. Resistance for the NY
Composite ($NYA) resides around 7900.
(click to view a live version of this chart)
Chart 5
(click to view a live version of this chart)
Chart 6
(click to view a live version of this chart)
Chart 7
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20110815-1