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Technical Market Report

The good news is:
 • As of last Friday the S&P 500 (SPX) had been up for 9 consecutivetrading days. That is an uncommon occurrence that implies a strong market.
 • All of the short and intermediate indicators are heading sharplyupward.
 • The secondaries have continued to outperform the blue chips.

The red line on the chart below represents the SPX; the blue line shows the percentage of the last 9 trading days that it has been up; the dashed vertical red lines are drawn on the first trading day of the year (the chart covers 16 years). The indicator (blue line) reaches the top of the screen when the index has been up for 9 consecutive days. The indicator touched the top of the screen Friday (not apparent on the chart below) and several other times in the past 16 years. Usually after 9 consecutive up days the index has paused for a few weeks before continuing to move upward.

The last time the SPX was up for 9 consecutive trading days was June 17, 1997. The chart below shows that period and what happened during the following month. The time before that was September 14, 1995 (not shown), the market was flat for about two months before resuming its upward move.

The chart below shows the Russell 2000 (R2K) in red, the SPX in green and Accutrack (a FastTrack relative strength indicator) as a histogram in yellow. Although it has lost some strength from its early October high, Accutrack has remained positive implying the secondaries (R2K) have been outperforming the blue chips (SPX).

Seasonally, next week is neutral on average; but in the 4th year of the presidential cycle, which we are in now, it has been slightly negative.

The number following the year represents its position in the presidential cycle.
The number following the daily loss or gain represents its position in the week.
1 = Monday, 2 = Tuesday etc.
The column days represent Monday through Friday next week.

R2K Day1 Day2 Day3 Day4 Day5
1988-4 0.35%-2 -0.32%-3 0.14%-4 -0.92%-5 -0.53%-1
1989-1 0.85%-3 -0.08%-4 0.34%-5 -0.07%-1 -0.15%-2
1990-2 -0.17%-4 0.96%-5 1.59%-1 0.34%-2 0.88%-3
1991-3 0.27%-5 0.26%-1 0.66%-2 0.01%-3 -0.12%-4
1992-4 0.80%-1 0.70%-2 1.13%-3 -0.07%-4 0.32%-5
1993-1 0.58%-1 0.48%-2 0.47%-3 0.21%-4 0.16%-5
1994-2 0.11%-2 -0.17%-3 -0.44%-4 -0.48%-5 0.32%-1
1995-3 0.28%-3 0.55%-4 0.12%-5 -0.24%-1 -0.69%-2
1996-4 0.08%-5 0.33%-1 0.12%-2 -0.01%-3 0.33%-4
1997-1 0.04%-1 -0.45%-2 -2.30%-3 -0.01%-4 1.19%-5
1998-2 -0.47%-1 -0.39%-2 -0.85%-3 -0.32%-4 -0.72%-5
1999-3 0.60%-1 0.27%-2 0.55%-3 -0.27%-4 0.49%-5
2000-4 -1.05%-3 -1.07%-4 -2.91%-5 -0.91%-1 2.18%-2
2001-1 -0.39%-4 -0.22%-5 0.54%-1 1.78%-2 1.00%-3
2002-2 -1.08%-5 -2.60%-1 1.50%-2 0.38%-3 2.69%-4
2003-3 -1.80%-1 -0.87%-2 2.29%-3 0.10%-4 -1.52%-5
Averages -0.06% -0.16% 0.18% -0.03% 0.36%
Winners 62% 44% 75% 37% 62%
 
Presidential year 4
  Day1 Day2 Day3 Day4 Day5
1988-4 0.35% 2 -0.32% 3 0.14% 4 -0.92% 5 -0.53% 1
1992-4 0.80% 1 0.70% 2 1.13% 3 -0.07% 4 0.32% 5
1996-4 0.08% 5 0.33% 1 0.12% 2 -0.01% 3 0.33% 4
2000-4 -1.05% 3 -1.07% 4 -2.91% 5 -0.91% 1 2.18% 2
Averages 0.04% -0.09% -0.38% -0.48% 0.58%
Winners 75% 50% 75% 0% 75%
 
SPX Day1 Day2 Day3 Day4 Day5
1988-4 0.45%-2 -0.66%-3 0.13%-4 -2.11%-5 -0.07%-1
1989-1 1.00%-3 -0.47%-4 0.75%-5 0.13%-1 -0.46%-2
1990-2 0.52%-4 1.99%-5 1.83%-1 -0.57%-2 0.86%-3
1991-3 -0.21%-5 0.06%-1 0.92%-2 0.17%-3 -0.05%-4
1992-4 0.24%-1 0.01%-2 0.86%-3 0.16%-4 -0.10%-5
1993-1 0.14%-1 0.03%-2 0.74%-3 -0.23%-4 0.59%-5
1994-2 0.56%-2 -0.05%-3 -0.23%-4 -0.44%-5 0.80%-1
1995-3 0.92%-3 0.26%-4 -0.09%-5 -0.07%-1 -0.51%-2
1996-4 0.44%-5 0.14%-1 -0.32%-2 0.22%-3 0.65%-4
1997-1 -0.69%-1 0.29%-2 -1.93%-3 1.18%-4 1.28%-5
1998-2 -0.95%-1 -0.17%-2 -0.65%-3 -0.29%-4 0.72%-5
1999-3 0.49%-1 -0.82%-2 0.57%-3 0.58%-4 1.06%-5
2000-4 -1.58%-3 -0.65%-4 -2.44%-5 -1.08%-1 2.35%-2
2001-1 0.25%-4 0.16%-5 -0.18%-1 1.86%-2 0.19%-3
2002-2 -0.88%-5 -2.07%-1 0.77%-2 -0.05%-3 2.46%-4
2003-3 -0.58%-1 -0.05%-2 1.15%-3 -0.01%-4 -0.76%-5
Averages 0.01% -0.13% 0.12% -0.03% 0.56%
Winners 62% 50% 56% 44% 62%
 
Presidential Year 4
  Day1 Day2 Day3 Day4 Day5
1988-4 0.45% 2 -0.66% 3 0.13% 4 -2.11% 5 -0.07% 1
1992-4 0.24% 1 0.01% 2 0.86% 3 0.16% 4 -0.10% 5
1996-4 0.44% 5 0.14% 1 -0.32% 2 0.22% 3 0.65% 4
2000-4 -1.58% 3 -0.65% 4 -2.44% 5 -1.08% 1 2.35% 2
Averages -0.11% -0.29% -0.44% -0.70% 0.70%
Winners 75% 50% 50% 50% 50%

Everything that matters is strong, but nine consecutive up days is a little too much of a good thing. Seasonally, the second week in November has been neutral to slightly negative. A strong move either way is unlikely.

I expect the major indices to be lower on Friday November 12 than they were on Friday November 5.

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