The recent new highs on the $NDX accompanying the recent rally off of the August and September lows have been accompanied by bullish headlines. $SPX 2300 , $DJIA 20K, etc. And it is true the action in some stocks is truly awe inspiring.
Yet all the action has an oddly familiar ring to it and it may not be bullish. While most traders today haven’t really lived through the 2000 bubble older hats like me have institutional memory. Back then it was the ‘horsemen’ of stocks that seemed to defy gravity and just kept pushing higher to stratospheric valuations. Yet back then the leadership was ever more narrowing and oddly enough we are now finding ourselves at a very similar spot.
And not only is the leadership narrowing, but it is happening at exactly the same price level.
In the $NDX chart below the horizontal red line is representing the exact same price as 15 years ago, right at the market’s peak of the year 2000. Note the negative divergence on the bullish percentage of stocks in the $COMPQ (click chart to zoom in). New highs with fewer stocks participating:
It is of course the $COMPQ that did not confirm news highs during this recent rally:
This post was published at Zero Hedge on 11/12/2015.
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