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Nasdaq New Highs and Lows a Concern

One thing that concerns us about the recent rally is the lack of new highs and the increasing amount of new lows.  If you look at the chart of the Nasdaq Composite below with its new highs in green and new lows in red you can see that all is not well with the index. We’re seeing negative divergences when we want to see confirmation of the rally.  An example of a positive divergence happened at the low made in early June.  As the market was breaking to new lows the number of stocks also hitting new lows was decreasing.  At the same time the number of stocks hitting new highs was increasing.  This was a positive divergence that gave hints that a good rally could follow.     Once the rally started the number of new highs and new lows on Nasdaq performed properly for a lasting rally.  Then we got a bad jobs report on 7/6/2012.  You can see in the chart the serious damage the jobs report

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