newlowshighsnear2percentofhighspyat161marcch10CLICK ON CHART TO ENLARGE

The top part of the chart highlights times when more “new lows versus new highs” took place within 2% of all-time highs. This just took place for the 5th time, in the past 15-years.

Looking back, this event took place in 2012 and┬ádidn’t mean much as the market continued higher. Last year it happened twice, right before the “Ebola” decline of just under 10%. It did take place back in 2007 and most know the results back then.

Should the bulls be concerned? This is what has my attention – The lower┬áchart above applies Fibonacci to the 2007 weekly closing high and the 2009 weekly closing low. The S&P rally has pushed the S&P up to the 161% Fibonacci extension level of these key dates and up against a rising resistance line. Since the S&P has reached this resistance zone, its made little progress of late.

Seeing the New Low/High situation taking place as the S&P 500 is facing the extension level, does increase my attention to this key price level.

Technical concerns would grow if….The Advance/Decline line weakens here and should the Discretionary/Staples ratio below break support.

discretionarystaplesratioactingokmarch11CLICK ON CHART TO ENLARGE

As you can see, the last two largest declines in the past decade (2007 & 2011) took place “after” the Discretionary/Staples ratio broke below rising support. At this time the ratio is above support and is near the highs of a year ago.

If you are concerned the market might be topping, it might be worth keeping a close eye on what this ratio does going forward along with the Advance/Decline lines as well.

 

 

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How The Recent Decline In Stocks Looks "Eerily" Like Major Bear Markets Of The Past