Here's the thing about bear markets. You can't have them with the list of new highs continuing to get longer, and a virtually non-existent list of stocks that are hitting new lows.
That's the biggest thing to remember here.
There aren't many stocks going down in price, which is a one of the most important prerequisites for a market correction.
Here's the Weekly Net New Highs List list reaching the highest levels we've seen this entire bull market:
I'm a big fan of counting the number of stocks making new highs, and THEN counting the number of stocks making new lows.
I think that is much more valuable than arbitrarily subtracting random numbers from one another.
You'll hear me saying that quite regularly about the net new highs list.
But today I wanted to share this chart in order to reiterate the lack of new lows.
Just reverse engineer what's happening here. The New 52-week highs list on the NYSE isn't even that long. We've seen this list much longer at different points this year.
But when you're essentially subtracting the number zero from any number, the original number is going to stand out and dominate.
This is what we're seeing in the net new highs list, which consists of mostly just new highs, and almost no new lows.
You're seeing the same thing in the NYSE Advance-Decline line, which just hit new all-time highs this week.
In this cumulative line of Advancers minus Decliners, on the world's most important stock exchange, it is also pointing to the lack of stocks going down in price.
The stocks going up continue to dominate the exchange.
In this case, I think the NYSE Advance-Decline line is making an even bigger point here than the NYSE Net New Highs list.
Because of course there aren't many new lows - we're over 2 years into a bull market. Prices in most stocks are really really far from new 52-week lows, but generally very close to new 52-week highs.
Hence the new cycle highs in the net new highs list.
The Advance-Decline, however, just measures those stocks going up in price minus those going down, regardless of their proximity to new 52-week highs or 52-week lows.
This one to me tells the real story about the current markets.
How about you?
Do you agree?
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