By Liz DeMera
I’ve attached this spreadsheet to show that we had 427 NYSE New Highs on 01/02/13, on Friday 01/18/13, we had only 335 New Highs, thus a negative divergence.
The question you have to ask yourself in the chart below is did this peak out? Since this is a 10 day MA High minus Lows indicator and we’ve dropped off the 427 from 01/02/13 can it make a higher high now?
On a 30 day MA basis this advancing volume % chart has too made a lower high relative to the SPX climbing higher.
As I stare at this chart I’m seeing a lower high from early February 2012 peak, yet we’ve recently made higher highs in price in the SPX, Russel, Transports, and Industrials.
A series of lower highs on this chart shows momentum is waning while the the .spx, .rut, .djt and .dji are at new price highs. When you look at the 10 day Ma or 30 day Ma its there. For me this a red flag, as the 10 day ma should not be sitting at +453 it should be up in the +900 area.
Lastly, I would like to conclude with the following question. Do you want to buy stocks with the .vix at 12.50, when the herd all wants it? For myself the answer is no. I wait until all the above charts are washed out and no one wants it. The risk reward is gone for me at this point in the cycle, with so many of the above internals either peaking out or showing negative divergences.
The following post was written by @lizdemera , who uses market internals and technical analysis to determine future stock market direction. Feel free to connect with her via twitter as she shares her insights there.