Testy Tuesday – NYSE 9,300 Or Bust!

The Russell is making new highs and the Nasdaq is just under it's May 22nd high of 3,532 (1%) the Dow is 2% under 15,542 and the S&P is also 2% under 1,687 but the NYSE is 4.5% below it's May high of 9,695 and still half a point below the 50 dma at 9,307 and, without that, the whole thing could fall apart.  

Painful though it may be, we stay bearish on these tests.  When we tested these highs in May, we were down almost 10% a month later on the NYSE and over 5% on the others.  

Why did the NYSE fall farther and why has it bounced less than the other indexes?  That's the key to understanding these markets.  

The problem is that the NYSE is a very broad index, with about 3,000 comanies listed and a Market Cap of roughly $20Tn.  The NYSE doesn't have any popular ETFs that track it, as it's too broad, which makes it very hard to manipulate – aside from it's size.  For example, while AAPL makes up about 17% of the Nasdaq, it's only 0.5% of the NYSE, which makes it so difficult (ie. expensive) to manipulate the NYSE that even Jamie Dimon would have trouble authorizing the funds.  

So, hopefully, the NYSE gives us a clearer picture of the market and we need to take it's lagging performance very seriously but, on the other hand – we cannot ignore the glory that is Russell 1,010 either.  The Russell (see Dave Fry's chart) is another broad index of 2,000 small-cap companies (under $2.6Bn, over $130M) and they add up to just $1.9Tn – much easier to push around!  

But, faked or no, we have to play the cards we're dealt and this is day two of Russell 1,000+ and now we have 3 of our 5 Must Hold lines green on the Big Chart, which means we need to get more bullish.  Both the Dow and the NYSE have a very long way to go to catch up (5%) but, if the rally is real – that shouldn't be a problem for either of them.  

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