New highs are not expanding, but neither are new lows
Housing costs fuel inflation but bonds are unconcerned
Risk on/risk off in neutral but broker dealers threaten break down
As 2021 began, the strong trends that emerged in 2020 were intact. But as we get ready to make the turn to the second half, we find ourselves looking at a muddled mess of stalled out trends and conflicting signals. How these resolve will go a long way toward dictating the paths that the market and the economy take over the second half of the year.
The NASDAQ and S&P 500 have continued their foray into record territory, but find themselves without much support. Take this week for example. New highs in the indexes on Monday & Tuesday came with a continued contraction in NYSE & NASDAQ new highs and more stocks declining than advancing on the S&P 500. The lack of strength has been noteworthy, but so too has been the lack of weakness. We are seeing lower highs in terms of new lows as well as higher lows in terms of new highs. Even on a shorter time frame, weakness has not gained traction. We’ve seen spikes in new 21-day lows but they have not made their way to the new 63-day low lists.
