Are Internal Market Cracks Turning Into Chasms?

Tyler Durden's picture

Via Dana Lyons' Tumblr,

Recently noted deterioration in market internals appears to be getting worse, as evidenced by this rare divergence in the Nasdaq market.

One of the hallmarks of our intermediate-term Risk Model that helps orient our investment posture toward equities is breadth, a.k.a., internals. Internals measure the level of participation in the stock market, e.g., how many stocks are advancing versus declining, the number of new highs versus new lows, etc. The more participation there is, the broader the foundation for a market rally – and the more comfortable we feel being aggressively invested.

In recent weeks, we have published a series of charts and posts highlighting what appears to be a weakening of the internals, or participation, in the market recently. This trend has been interesting to note since the major large-cap averages have continued to trade near their all-time highs. That trend has not slowed down. In fact, it has arguably accelerated, as evidenced by today’s Chart Of The Day.

Today’s ChOTD shows that while the Nasdaq 100 (NDX) remains close to its 52-week high (i.e., less than 1% away as of yesterday), the number of new 52-week lows is now outstripping new highs on the Nasdaq exchange. Not only that, but the number of net new lows, i.e., new lows minus new highs, equated to more than 2.5% of all issues traded on the Nasdaq.

If that does not seem like a big number, it is actually just the 9th day ever that saw so many net new lows while the NDX was so close to its 52-week high.

As the chart suggests, prior occurrences seeing such conditions appear to have come at inauspiciously timed junctures. We’ve asked the question in our previous posts on “internal cracks” – do these examples constitute discernibly negative events? Or could they be mere coincidences or stat-foolery?

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Cognitive Dissonance's picture

Nothing a little lot of central bank printing can't fix.

/sarc because it's no longer obvious to certain special ZH snowflakes

/sarc /sarc

spastic_colon's picture

"Nothing a little lot of central bank printing can't fix."


More like "Nothing a false flag and then fake crisis solution cant fix"


this is all a set up for VIX smash "All is well now!" north korea rally..................

GUS100CORRINA's picture

Are Internal Market Cracks Turning Into Chasms?

My response: Does anyone really think or believe that any of the current market valuations represent reality?

The disconnect between MAINSTREET and WALLSTREET is so blatantly obvious that even a 5 year old could see it. The real ELEPHANT in the ROOM is DEBT and CASHBURN per day.


Of course, the rescuing device everyone uses is that the CENTRAL BANKS have our backs, correct? If we get into trouble, they will just print (create out of thin air) more money like our friends at the SNB.

At some point, the insanity has to end one way or another.

hootowl's picture

The Faux-Hebrew Babylonian/Persian/Khazarian/ bankster demons knew the mathematically-certain, inevitable end from the beginning, hundreds of years ago.  The inevitable economic collapse of the fraudulent fractional-reserve, debt-money, system has been inflicted upon this modern age by the ubiquitous infusion of financial error and the omission of basic financial truths surreptitiously inculcated by pernicious academic institutions, rife with misanthropic intent and a demoniacal agenda.  This imminent economic collapse was not an accident.

onthedeschutes's picture

If you want to be taken have to enclose the term "markets" in double quotes.

Cognitive Dissonance's picture

" have to enclose the term "markets" in double quotes'.

Then wouldn't it actually be this?  ""markets""

Looks so much more manly and robust this way.

/sarc yada yada yada

Dave the jew's picture

But the trajectory is up up up!since it's inception ! The stock market wasn't built to loose . The house always wins .

Cognitive Dissonance's picture

The fact various 'indexes' replace 'losers' with 'winners' tells you all you need to know about the purpose of indexes. And it ain't for the purpose of following the markets, but of leading them by the nose.

Markets don't move, they are moved in a thousand different ways large and small.

eclectic syncretist's picture

This might represent the first chinks in the armor of the "market" ultimately leading to much lower prices, but it's far too early to say. A 2%+ down day for the indices on ~3+ times normal volume and no obvious bad news would be substantially more telling as to whether it's time to seriously consider ponying up some cybernumbers on the short side for a longer-term trade. 

GooseShtepping Moron's picture

The FAANGs aren't really companies anymore in the traditional sense. They are more like Deep State Directorates, funded by QE and economic repression. And they are the only stocks advancing. I wonder why?

T-NUTZ's picture

the fix is simple:  our fearless leaders in the .gov will buy the QQQ's and short the vol!

onthedeschutes's picture

Looks like the plunge protection team just plastered over todays "market" cracks.

Stormtrooper's picture

Yes, good thing we have the Fed to make sure there are no free markets or the business cycle might actually run its course and make the speculators pay dearly.

Knave Dave's picture

Yeah, business might actually be business and industries might have to actually run as industries, rather than as stock engine, businesses might have to actually be productive and make sales ... instead of just the wealthy catching all the free money that pretends not to be free by laundering itself in the stock market!

Trade Maiden's picture

Ive also read Forex Kong is moving HEAVILY into Canadian Marijuana Stocks. This guy nails it - often.

voting machine's picture

So is this a buy signal...?

Hell yea...!!!

innertrader's picture

Don't know how sever, but the S&P will break hard, at least into October!!!






Conax's picture

Hey- who drew that picture of my ex wife's hooha?

She was a real ditch.

spencer's picture

can someone please explain how is the 2.5% of 100 companies calculated? Or is this a paper for mathematical illiterates?