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Thursday, September 20, 2012

Extreme new highs

I mentioned in a recent daily update the extreme number of new highs we saw after the FED QE announcement.  I thought it might be interesting to take a look at prior instances.  The stockcharts.com data starts at 1990.  Here are the instances of over 500 new highs.  The first instance since was in 1997. 

The next instance was in 2003.

The next instance was in late 2006.

The next time it happened was in 2010.

Just before the meltdown in the summer of 2011 new highs got just short of the 500 number.  This brings us up to today.  Here is the current chart.

After our little trip into history we clearly do not have anything quite like this since 1990.  Most instances barely make 500.  Most of the time there was a pullback to at least the 50 SMA.  Sometimes prolonged corrections or crashes.  In Dec. 2003 and March of 2010 there were single 500+ readings where the market accelerated up some more before correcting.  The 2003 instance ended up with a prolonged correction in 2004, and the 2010 instance crashed a few weeks later.  What is going to happen this time?


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