Another Look at the New Highs Indicator

Recently, I posted about a new highs indicator that I keep track of in relation to the S&P. The conclusion of the post was that fewer and fewer new highs were an indication that the S&P would fall and that a reversal would not occur until we started seeing more new highs.

Here's an updated chart that shows the S&P vs. the TLT New Highs Multiplier.
As you can see, the new highs multiplier continues to dwindle within a very low and tight range. Does this mean that we're about to see another major drop in the markets? Not sure, but one thing I do know, we probably won't see any meaningful rallies until we start seeing a rising trend in the new high multiplier line. I'm almost tempted to take this bearish reading as a contrarian indication (especially because the public is so bearish right now) and buy a little of the S&P, just a nibble, to start building a long term position. We'll see, only time will tell.

Good luck out there.

TLT