Weekly Market Commentary: New 52-Week High Spike

The rally is close to a top as marked by the spike high in the 19-day EMA for both the NYSE and Nasdaq. For the NYSE, this spike is the highest in over 10 years, so there is a good chance Friday’s strong finish will turn out to be the actual top for this phase of the rally.  While the Nasdaq spike hasn’t reached the heights of 2003, it has exceeded spikes from previous late event rallies (e.g 2007).

The Percentage of Nasdaq Stocks above the 50-day MA is also heavily overbought and has reached a spike high. However, spike highs in this breadth metric rarely match the actual top in the market.

The Nasdaq Bullish Percents finally reached declining resistance. A good opportunity to look for a pullback in the index.

Despite coming close to a high, the Nasdaq hasn’t cleared the swing high in 2012. Given the spike highs in the aforementioned breadth indices, it’s unlikely the Nasdaq will get much beyond 3,200 before it starts a new downleg.

The Russell 2000 maintained its early breakout and has moved well beyond support, to the point it needs to consolidate the move. Technicals are heavily overbought.

Finally, the S&P pushed higher, but volume buying was light.

Based on action in Nasdaq breadth indices there is a good chance a swing high will come into play next week. The Russell 2000 will probably peak first, then the Nasdaq and finally the S&P.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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