Wednesday, March 21, 2007
Here is a line chart of the daily count of the number of issues traded on the New York Stock Exchange that advance in price. The chart covers the past 12 months of trading and the red line is the 10 day moving average of the daily number. I last commented on this indicator here.
The most significant thing I see in this chart is that the 10 day moving average today has moved to a level higher than any it has seen in the past 12 months. In particular it is now higher than at any time during the 8 month advance from the June 2006 low point. I think this means that
the market will continue its current advance for at least another month and quite possibly for two.
Of purely historical interest is the fact that at the March 14 low there was a bullish divergence visible between both the daily advancing issues count and its 10 day moving average and the market averages themselves. The advancing issues numbers made higher lows while the market averages made lower lows. I noticed this at the time but didn't think it was significant in the broader context. In any case this divergence can be seen (post hoc) as evidence that the low of a week ago was an important one.
I think the March 14 low will hold and that all the averages will soon be trading at new highs for the bull market which began in 2002.