$TRAN SOARS WITH TRUCKING, AIRLINES AND RAILS ALL IN GEAR -- $NAHL DIPS BELOW BULL MARKET TREND -- $NYHL STAYS IN BULL MARKET TREND -- $SILVER CONTINUES TO PUSH DOWN ON THE BOTTOM RIGHT -- $GOLD LOOKS TO RETEST ANNUAL LOWS IN JUNE
$TRAN SOARS WITH TRUCKING, AIRLINES AND RAILS ALL IN GEAR... The Dow Jones Transportation Index ($TRAN) has clearly broken out to new highs as shown in Chart 1. There are three sub-indexes that make up the Transportation Index; Airlines ($DJUSAR), Rails ($DJUSRR) and Trucking ($DJUSTK). All three sub-indexes have soared well above old highs so the Transportation move is broad based while the S&P 500 ($SPX) and the Dow Jones Industrial Average ($INDU) are just above or near new highs. The Transportation Index has now pushed up against the top of the trend channel so further price appreciation should be monitored closely.
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Chart 1
THE $NAHL DIPS BELOW BULL MARKET TREND... The Nasdaq "Highs minus Lows" ($NAHL) is struggling to stay in bull market mode on Chart 2. When we are in Bull Market mode, the indicator lows are around zero and the highs are well above 100. When we are on the defensive, the highs are around 100 and the most of the action is below zero which means the number of stocks making new 52 week lows is outpacing the number of 52 week highs on a daily basis. The area marked in pink is the buffer area. The recent weakness is concerning as the Nasdaq can be an early indicator.
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Chart 2
THE $NYHL STAYS IN BULL MARKET TREND... Chart 3 shows the New York Stock Exchange "Highs minus Lows" ($NYHL) is staying in bull market mode. When we are in Bull Market mode, the indicator lows are around zero and the highs are well above 100. When we are on the defensive, the highs are around 100 and the most of the action is below zero which means the number of stocks making new 52 week lows is outpacing the number of 52 week highs on a daily basis. The area marked in pink is the buffer area. We can see the $NYHL is still bullish with a slight decline over the last year in the indicator. When both the $NYHL and the $NAHL are below zero, caution is warranted.
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Chart 3
$SILVER CONTINUES TO PUSH DOWN ON THE BOTTOM RIGHT... Silver ($SILVER) is a precious metal that continues to weaken based on Chart 4. It closed on Thursday near Wednesdays lows but still near the 2 year lows again. This chart continues to test the bottom edge. Gold has bottomed near July the last few years. Perhaps the precious metals need another month to base. $SILVER was trading at $18.76 at the time of writing this morning so Mays closing levels will test the 52 week lows.
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Chart 4
$GOLD LOOKS TO RETEST ANNUAL LOWS IN JUNE... Gold ($GOLD)has not been as weak as Silver, but it continues to deteriorate on Chart 5. With both metals breaking down and the US Dollar ($USD) gaining strength, this needs time. The chart is top left to bottom right. I have highlighted the July lows over the last few years. Notice in 2011/2012 we have a sequence of lows 6 months apart. I have circled the dates of the July and January each year. It has been a remarkably strong turning point. Investors may wish to start scouting which Gold stocks they would be interested in over the next few weeks if they like to invest based on cycles.
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Chart 5
$NYA VOLUME LEVELS OFF... The New York Stock Exchange Composite Index ($NYA) is the summary of all stocks on the New York Stock Exchange. The 50 Day Moving Average (50 DMA) for the $NYA has been declining since the 2009 highs.Chart 6 shows the volume on the second plot has moved sideways over the last 2 years. We continue to hear the Business News Channels discussing low volume but the average volume has been in this range for 2 years. What is more interesting is the trading volume is back to 2007 levels with all of the corporate share buybacks. To generate this chart, set the volume as an indicator to invisible (Opacity = 0) and overlay the moving average. If you click on the charts, you can see the settings.
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Chart 6
The month of May enabled slightly higher highs for the US markets. There is some divergence between the different indexes but the large caps continue to be bid up. The precious metals continue to go lower, but we may find the precious metals bottoming in late June. The recent weakness in the New Highs- New Lows is concerning, but so far it is only on the Nasdaq. Should this start to tick down in June on the NYSE, we need to watch carefully.
Lastly, in order to catch the early registration price for Chartcon 2014, you will need to register today or tomorrow. Click here for details Have a good weekend.
Good trading,
Greg Schnell, CMT
