There are no magic indicators that are right 100% of the time, no silver bullets, no “one Ring to rule them all.” That’s why we spend so much time talking about weighing the evidence and looking at the behavior of risk on and risk off indicators. That being said, there are times when one indicator or another seems particularly relevant. That is now the case with the number of stocks making new highs and new lows on the NYSE+NASDAQ. The spread between new highs and new lows peaked in early 2021 and was fading (though stayed positive) for much of the year. The situation deteriorated in November and new lows started to outnumber new highs. Even as the indexes moved off of their January lows, we’ve continued to see more stocks making new lows than new highs. Since 2000 all of the net gains in the major US indexes (S&P 500, NASDAQ Composite, Russell 2000, Value Line Geometric Index) have come when the cumulative net new high list has been expanding. The bottom line is that history suggests the indexes could continue to struggle so long as new lows are outnumbering new highs.
