Monday, April 16, 2007

Strong Start To The New Week

The market closed at its highs for the session, putting in a strong showing. Breadth was very strong, and volume rose on the NYSE, making for an accumulation day.

The S&P 500 closed at a new yearly high today, as did the Midcap 400 Index, and the Russell 2000 Index. The Nasdaq was one of the long indexes that did not make a new yearly high.

Small caps outperformed today, with the RUT +1.5% vs. the RLG +1.0%. Brokers were the standout group, +3.30%, followed by banks (+1.9%) and homebuilders (+1.60%). Consumer staples lagged for the day (+0.41%).

The Hi/Lo Index exploded today, with 405 new highs on the NYSE. That is quite impressive. But looking back at past peaks in this area, I find some anecdotal evidence that when the new highs index spikes like this, at the same time the market is reaching overbought levels, it has paid to be cautious and not chase market strength.

The NYSE showed 421 new highs on February 7th, which was a few weeks before it peaked. So it doesn't mean run out and sell everything, but I thing it does warrant monitoring.


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