“There are several indicators that monitor the internal “health” of the market that are likely to give us “early warning” signs that a more serious illness is developing. These include changes in momentum, sentiment, breadth and money flows. This week, we will review five measures in particular: Net New Highs, Advancing vs Declining Issues, Bullish Sentiment, Number Of Stocks Above Their 200-Day Moving Average (DMA), and Number Of Stocks On Bullish Buy Signals. I will also review our long term buy / sell indicator which is critical to identifying changes in the current market trend.

We will start with the number of NET new highs. This is the number of stocks hitting new highs less the one hitting new lows. In an “exuberant” bull market, you would expect to see the number of net new highs at very high levels. This is the 50-week moving average of net new highs. One thing to notice is that the current peak in the long term moving average of net new highs is at the highest levels in history.

….continue reading this 15 page report HERE