gave strong warning signs as tech stocks were topping in late 2021. Based on the daily analysis the New Highs on the Nasdaq Composite and NYSE have been trending higher since late April and May. The Nasdaq New Highs made a new high with the Composite two weeks ago line a, but last week did make a lower high.
This analysis is not as sensitive as the A/D line and often takes more time to signal a top as was the case in 2021. The current minor divergence in my view is not yet a critical warning but should not be ignored. The trigger for a top is likely to be a sustained move above 200 New Lows for the Nasdaq Composite . These values as well as the NYSE New High and New Lows are tracked regularly.
In 2023, there have been warnings ahead of earnings season. That has also been the case for the current earnings season numbers and has been a frequent argument from bearish strategists. So far the earnings have been acceptable but we will know more in a few weeks. Unless we are in a transition phase, which we are not, I continue to see the negative outlook for earnings as a positive sentiment reading for the stock market.
Clearly, the bearish case is a harder sell with the market even further above the consensus closing S&P 500 price at 4078. At the start of July, I wondered . I thought that a move above 4250 or 4300 might be enough. Last week there were some signs of modification from some of the highest-profile bearish market strategists as the S&P 500 crossed 4600.quarter so they can adjust their portfolios to look more bullish. I doubt that the market will do much to help them as they may have to wait another month. These dip buyers could be supportive for the market over the near term.