All Time Index Highs That Lack Conviction: What The Issues Are

A lot of feel-good talk about the new all-time highs for the S&P 500 and the NASDAQ-100 might be overlooking underlying issues. A closer examination of a few items is clarifying.

The VIX tells the basic story. The volatility index, as it’s known, is a definite non-confirmation.

Here’s the point-and-figure chart of the VIX:

It’s not necessary to understand the underlying complexity of the volatility index. Just know this: it moves counter to the major indices such as the S&P 500 and the NASDAQ-100. That is, when they’re selling off, the VIX quickly rises. When they’re hitting new all time highs, the VIX typically hits new lows. Well, except this time.

There is no new low for the volatility measure at a moment when the financial media are headlining and heralding the “all time highs” narrative for stocks. To those analysts who follow these types of measures, it’s an uncomfortable feeling, maybe even bordering on fishy.

But wait, there’s more.

You’ve got a long row of Dow Jones Industrials components failing to make new highs. Once you leave the small universe of big name, big tech names like Apple, Microsoft, Google and Facebook, it’s tough to find a lot of 52-week peaks. Many familiar Dow 30 companies appear to be weakening in price.

Take a look at the daily price chart for Boeing:

The stock hit its 52-week high in mid-March at 275. Since then it’s been unable to keep up with the hot tech names. Boeing closed today at 215. Just for the record, this Dow component hit its all time high of 430 in early 2019. It’s been down trending — with occasional small rallies — since then.

The daily price chart for Intel looks like this:

The NASDAQ-traded Dow 30 component, a major manufacturer of semiconductors, is nowhere near an all-time high. That came back in April at 67.50 after which a steady stream of selling commenced. The Santa Clara, California-based chip maker closed today at 53.

The Disney daily price chart looks like this:

The all time high came in early March at 202 and has not been approached again. Note how the nice upward blast on heavy volume in mid-August could not be sustained. That entire move has been given back now and the stock closed today at 177.66. A headline-making Scarlett Johansson lawsuit over the Disney-produced movie “Black Widow” is probably not helping.

Caterpillar’s daily price chart is here:

You can see how this major Dow 30 component peaked at the beginning of June at 245. That marked the beginning of some serious selling for the rest of that month and into the summer. The nice rally from early to mid-August has now ended with continued selling. Caterpillar is down to 209.14 at the close today.

So, take a look at these charts and consider well how much credence you want to give the “all time high” headlines. Underneath the surface, the stock market may be groaning a bit.

Not investment advice. Do your own research and always consult with a registered investment advisor before making any decisions.

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