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NASDAQ’s New Lows at Multi-Year Highs
Author: Price Headley (info)
Website: http://bigtrends.com
Posted: August 8th, 2007 at 3:08 pm EST
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A few days ago we commented on high a colossal number of ‘new lows’ for the NYSE was likely to be a signal that the bottom had already been made. We also discussed how the NASDAQ exchange was basically showing the same data - too many new lows for the selling to persist much longer.
As it turns out, the NYSE and the NASDAQ aren’t as synchronized as you might think. Though the NYSE hit a huge ‘new low’ level of 828 on July 26th, the NASDAQ hit a recent ‘new low’ peak number of 532 just this Monday - the 6th of August. That was also the same day the NASDAQ Composite hit a multi-week low of 2491.96 before snapping back and turning a good-sized intra-day loss into a big win (which may have been the pivot point).
The premise is till the same though - too much of anything is just too much. Here’s the chart.
NASDAQ Composite, with New Highs & New Lows - Daily
Though the unusual nature of that many news lows is evident on this short range chart, it may not do it justice. To really illustrate just how unusual 532 new lows is, let’s look at the same chart on a weekly basis. The intra-week (daily) highs will still show up as the tallest point in the bar.
NASDAQ Composite, with New Highs & New Lows - Daily
The last time we saw a new low number anywhere near that high was October of 2002, which was also the end of the bear market. All of the other major surges in news lows are associated with market bottoms.
Just wanted you to be aware, for future reference. In the meantime…
Leaders and Laggards
We’ve looked at a market cap and style percentage change chart before, but it’s time for an update (particularly in the shadow of a big pullback and potential rebound).
Like last time, we’re looking at larges caps (S&P 500), mid caps (S&P 400), and small caps (S&P 600). We’ve also broken each of those groupings into two styles - growth and value. What we’re looking for is relative leadership, and perhaps a rotation out of one style box and into another.
Market Cap and Style Index Percentage Change - Since 12/29/06
Though all the caps and styles are down from a couple of weeks ago, mid-cap growth stocks have performed the best and also recovered well following last week’s big pullback. Small cap value has been a terrible performer, and couldn’t even do well with big help from the previous two days worth of bullishness. Though this group is the long-term leader, they’re short-term weakness doesn’t make them attractive right now.
You can also see that value in general has taken a back seat to growth over the last few months. That’s in complete contrast to 2006’s results.
It may not seem like a big deal, but take a look at just the difference in percentage results between the top and bottom performers. That’s about a 16% differential (and the difference between positive and negative returns). That’s a pretty serious edge.
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Indexes, Price Headley, Stock Market
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