Stock Market -- Weekly

Technical
This week I return to the broad, unweighted Vale Line -A index and the NYSE advance -
decline line. I use these two measures in tandem as a sort of informal model of the stock
market.

First up is the Value Line 1700 + issues chart. $VLE  By this measure, the market is trading
at an all-time high. Using the Sep. 2011 low, my trend work suggests this market is over-
extended on the upside for the first time since the spring of last year. No red light here, but an
amber warning signal. The VLE is also overbought on RSI and MACD, and the weekly
price momentum indicator is just coming off an overbought +20%. The market is on a rising
trend, but this is a very mature rally.

Next we turn to the NYSE weekly A/D line. $NYAD The chart includes the VLE in the top
panel. Here again, we have an uptrend in breadth which is also making new highs. We also
have an overextended market reading and overbought indications for stochastic RSI (momentum)
and plain RSI. The stock market when rising tends to start to have difficulties when the
weekly A/D line begins to get tangled with its own 6 week moving average. It is running free and
clear above the 6 m/a now, and a toppy suggestion is not likely to come unless the A/D line
starts to break down against  its 6 wk. m/a. Keep this in mind.

Fundamentals
The Fed remains on a relatively vigorous QE program, with the QE trend remaining strongly
positive after a slow start last autumn. The weekly cyclical fundamental indicator has eased off
modestly in the past couple of weeks as sharp progress in the reduction of new unemployment
claims and in sensitive materials prices has ebbed. Continuing progress in stocks in the past
few weeks represents a divergence to the WCFI, but note as well that stock price momentum
has started to slow.