Are We Getting Frothy?
by Brian BolanDecember 19, 2012 | Comments : 3 Recommended this article: (0)
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One of my key indicators of froth is when markets are at a clear point of indecision, yet stocks, and I mean a whole bunch of them, are hitting new highs.
I took a quick look at New Highs vs New Lows (NHNL) just before I started writing this and the highs were crushing the lows, 504-57. The other day level was just as strong... as well. I can kind of see the strength yesterday as the market had two straight days of 100+ point moves on the Dow.
The last time the indicator was shifted the other way, with new lows stacking up more than new highs was in mid November. At that time the NHNL reading was -333, and that was the start of a mini rally which has extended through today.
With the markets taking a bit of breather, and so many stocks hitting new highs, is it time to pull some chips back off the table?
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