Technical Market Report for September 14, 2013

By: Mike Burk | Sat, Sep 14, 2013
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The good news is:
• The NASDAQ composite (OTC) closed at a multi year high last Tuesday.


The negatives

Most of the Major indices are near their all time highs while the number of issues hitting new highs has been declining for months.

The chart below covers the past 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.

NY NH appears to have stalled at a very low level.

SPX versus NYSE NH Chart

The next chart is similar to the one above except it shows the OTC in blue and OTC NH, in green, has been calculated from NASDAQ data.

The OTC closed at a multi year high last Tuesday while OTC NH was near a 6 month low.

OTC versus OTC NH Chart


The positives

For all practical purposes, new lows remain non existent.

The chart below covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of NASDAQ new highs divided by (new highs + new lows), (OTC HL Ratio) in red. Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the neutral 50% level.

OTC HL Ratio finished the week at a very strong 89%. There are trading systems that impose a NO SELL filter when variations of this indicator are above 80%.

OTC versus OTC HL Ratio Chart

The next chart is similar to the one above except it shows the SPX in red and NY HL Ratio, in blue, has been calculated from NYSE data.

NY HL Ratio has also moved into positive territory finishing the week at 67%.

SPX versus NYSE HL Ratio Chart


Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of September during the 1st year of the Presidential Cycle.

The tables below show the daily percentage return for the 5 trading days prior to the 3rd Friday of September during the 1st year of the Presidential Cycle.

OTC data covers the period from 1963 - 2012 while SPX data runs from 1953 - 2012. There are summaries for both the 1st year of the Presidential Cycle and all years combined. Prior to 1953 the market traded 6 days a week so that data has been ignored.

Average returns for the coming week have been negative by all measures.

Report for the week before the 4th Friday of September.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 0.30% 0.26% -0.22% 0.26% -0.69% -0.09%
1969-1 0.40% 0.41% 0.77% -0.17% -0.27% 1.14%
 
1973-1 0.21% 0.10% 0.75% 0.59% -0.06% 1.58%
1977-1 -0.39% -0.12% -0.47% -0.29% 0.10% -1.17%
1981-1 0.08% -0.62% -1.78% 0.22% -2.00% -4.11%
1985-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1989-1 -0.15% 0.03% -0.07% 0.06% 0.23% 0.11%
Avg -0.06% -0.15% -0.39% 0.14% -0.43% -0.90%
 
1993-1 0.01% -0.90% 1.63% 0.90% 0.32% 1.97%
1997-1 0.54% 0.47% -0.59% -0.50% 0.20% 0.11%
2001-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2005-1 -0.70% -0.65% -1.16% 0.20% 0.29% -2.02%
2009-1 0.24% 0.39% -0.69% -1.12% -0.79% -1.97%
Avg 0.02% -0.17% -0.20% -0.13% 0.00% -0.48%
 
OTC summary for Presidential Year 1 1965 - 2009
Avg 0.05% -0.06% -0.18% 0.01% -0.27% -0.44%
Win% 70% 60% 30% 60% 50% 50%
 
OTC summary for all years 1963 - 2012
Avg -0.19% -0.10% -0.01% -0.28% -0.13% -0.71%
Win% 40% 50% 55% 38% 48% 42%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.31% 1.40% 0.13% 0.04% 0.26% 1.52%
1957-1 -2.00% 0.68% -1.21% 0.26% -0.05% -2.32%
1961-1 -0.65% -0.79% 0.42% 0.04% -0.40% -1.38%
1965-1 0.03% -0.30% 0.46% -0.40% 0.18% -0.03%
1969-1 0.46% 0.00% -0.14% -0.76% -0.64% -1.08%
Avg -0.49% 0.25% -0.07% -0.16% -0.13% -0.66%
 
1973-1 0.15% 0.64% 0.72% 0.23% -0.60% 1.15%
1977-1 -0.65% 0.04% -0.82% -0.01% -0.05% -1.50%
1981-1 0.84% -0.48% -0.88% -0.55% -1.95% -3.02%
1985-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1989-1 0.48% -0.05% -0.02% -0.22% 0.39% 0.58%
Avg 0.21% 0.04% -0.25% -0.14% -0.55% -0.70%
 
1993-1 -0.82% -0.46% 0.72% 0.34% -0.02% -0.25%
1997-1 0.52% -0.37% -0.78% -0.70% 0.78% -0.55%
2001-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2005-1 -0.56% -0.79% -0.91% 0.37% 0.06% -1.83%
2009-1 -0.34% 0.66% -1.01% -0.95% -0.61% -2.25%
Avg -0.30% -0.24% -0.50% -0.24% 0.05% -1.22%
 
SPX summary for Presidential Year 1 1953 - 2009
Avg -0.22% 0.02% -0.26% -0.18% -0.20% -0.84%
Win% 46% 42% 38% 46% 38% 23%
 
SPX summary for all years 1953 - 2012
Avg -0.39% -0.03% -0.09% -0.19% -0.13% -0.82%
Win% 31% 47% 51% 39% 41% 36%


Money Supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth remained aligned with the elevated trend last week.

M2 Money Supply versus S&P500 Daily Chart


Conclusion

The market remains a little overbought and seasonality for next week is negative.

I expect the major averages to be lower on Friday September 20 than they were on Friday September 13.

Last weeks negative forecast was a miss.

This report is free to anyone who wants it, so please tell your friends. They can sign up at: http://www.alphaim.net/signup.html. If it is not for you, reply with REMOVE in the subject line.

In his latest newsletter, Jerry Minton explains the Alpha Seasonal Index as published by Thomson Reuters. The letter is free and you can sign up at: http://alphaim.net/

Good Luck,

YTD W 19/L 11/T 7

 


 

Author: Mike Burk

Mike Burk

Mike Burk independently publishes a weekly newsletter on the stock market from a technical perspective.

Charts and figures presented herein are believed to be reliable but we cannot attest to their accuracy. Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus (qp2.com) and the Wall Street Journal (wsj.com). Historical data is from Barron's and ISI price books. The views expressed are provided for information purposes only and should not be construed in any way as investment advice. Furthermore, the opinions expressed may change without notice.

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