NYA update; slow and steady wins the race?

Line charts are a great way to assess the market since they reduce the day-to-day-noise by simple recording closing prices, which is perfectly in line (pun intended) with I.I.’s KISS principle (keep it super simple). Figure 1 below “broadens our view” so to speak, by first showing the DOW (only 30 stocks), the broader S&P500 (500 stocks) and the even broader NYA (4000+ stocks). Using this approach, each chart adds value to our analysis by providing subsequent weight to the evidence (i.e. if the narrow to broad indices show the same things, then each adds weight to the same evidence.). Enough said, what is evident is that the S&P500 and NYA closed above their prior weekly ATH closes, and above all prior S/R levels. The DOW didn’t, there’s still the ATH close left. The 2nd observation is that price is above the most important ascending trend lines since the low made mid-October 2014 for most indices, except for one on the S&P500. Many trend lines can be drawn, but let’s focus on those that appear most important.

Figure 1DOW, SPX, NYA daily line chart: prices closed above most trend lines and S/R levels.

all 3In addition, price keeps on making higher lows and now also higher highs. Hence, the weight of the evidence shows an up trending market that made mostly ATH closes on Friday. As such -and until this pattern changes with lower lows and lower highs as well as price falling back down below the horizontal S/R levels and ascending trend lines- higher prices should be expected. This is further exemplified by the detailed trend line chart of the NYA. See figure 2 below. Last week price closed right at the lower blue trend line (yellow arrow), but this week it closed above it (red arrow). The bullish wave count is the preferred wave count simple because the market has not invalidated it, and also since this is a bull market until proven otherwise. However, to remain objective and because the market is all about probabilities and not certainties, the alternate count (labeled “Alt:…”) has an ending diagonal developing.

Figure 2. NYA daily chart: price above all most all longer term S/R lines. Two possible wave counts.

NYA trendlines2


We’ll keep monitoring price, indicators, trendlines, market breadth, etc etc to let the market tell us which path it chooses to take, but in the end it’s not about the ultimate correct count. No, it’s about being on the right side of the trade and trading the prevailing trend. That’s where the money is made, that’s where I.I. is. The rest is gravy.


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