Technical Market Report for November 23, 2013

By: Mike Burk | Sat, Nov 23, 2013
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The good news is:
• The NASDAQ composite (OTC) closed at a multi year high on Friday and the rest of the major indices closed at all time highs.


The negatives

New highs picked up at the end of last week, but remain well below levels seen earlier in the year when the indices were lower.

The chart below covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.

OTC NH has been making progressively lower highs most of this year.

OTC versus OTC New Highs Chart

The next chart is similar to the one above except is shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated from NYSE data.

NY NH also failed to confirm the new high in the index.

SPX versus NYSE New Highs Chart


The positives

New lows have remained at non threatening levels.

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 bounced around the 80% level last week and closed at 84% on Friday.

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 remains positive, but appears to be in a falling trend.

SPX versus NYSE HL Ratio Chart


Seasonality

Next week is seasonally significant in two ways. It is the week of Thanksgiving and it includes the last 4 trading days of November during the 1st year of the Presidential Cycle.

I have included 2 sets of tables, the 1st shows the daily percentage return for the last 4 trading days of November and the 2nd shows the week of Thanksgiving.

OTC data covers the period from 1963 - 2012 while SPX data for the end of month table runs from 1928 - 2012. and for the Thanksgiving table 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 the SPX Thanksgiving data for that period has been ignored.

The last 4 days of November have been weaker than Thanksgiving week and weaker during the 1st year of the Presidential Cycle than other years.

Report for the last 4 days of November.
The number following the year represents its position in the Presidential Cycle.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.

OTC Presidential Year 1
  Day4 Day3 Day2 Day1 Totals
1965-1 -0.02% 3 0.47% 5 0.47% 1 0.11% 2 1.03%
1969-1 -0.55% 1 -1.24% 2 0.05% 3 -0.11% 5 -1.86%
 
1973-1 -3.26% 2 0.86% 3 -0.34% 4 -1.17% 5 -3.91%
1977-1 0.57% 5 -0.26% 1 -0.83% 2 -0.05% 3 -0.56%
1981-1 0.52% 2 0.49% 3 0.50% 5 0.17% 1 1.69%
1985-1 -0.33% 1 0.24% 2 0.81% 3 0.30% 5 1.01%
1989-1 -0.10% 1 0.11% 2 -0.19% 3 0.06% 4 -0.12%
Avg -0.52% 0.29% -0.01% -0.14% -0.38%
 
1993-1 0.85% 3 0.22% 5 -0.44% 1 0.38% 2 1.01%
1997-1 -2.09% 1 0.13% 2 0.35% 3 0.38% 5 -1.23%
2001-1 -0.27% 2 -2.48% 3 2.40% 4 -0.14% 5 -0.49%
2005-1 0.13% 5 -1.04% 1 -0.30% 2 0.00% 3 -1.20%
2009-1 -0.31% 2 0.32% 3 -1.73% 5 0.29% 1 -1.44%
Avg -0.34% -0.57% 0.06% 0.18% -0.67%
 
OTC summary for Presidential Year 1 1965 - 2009
Averages -0.40% -0.18% 0.06% 0.02% -0.51%
% Winners 33% 67% 50% 67% 33%
MDD 11/30/1973 3.90% -- 11/28/2001 2.74% -- 11/24/1997 2.09%
 
OTC summary for all years 1963 - 2012
Averages 0.24% 0.14% 0.37% -0.02% 0.72%
% Winners 56% 66% 68% 64% 62%
MDD 11/30/2000 10.55% -- 11/30/1987 3.97% -- 11/30/1973 3.90%
 
SPX Presidential Year 1
  Day4 Day3 Day2 Day1 Totals
1929-1 -0.37% 5 -1.16% 1 -2.91% 2 1.26% 3 -3.19%
 
1933-1 0.30% 6 -3.49% 1 0.10% 2 1.86% 3 -1.23%
1937-1 4.92% 5 4.78% 6 -1.97% 1 1.37% 2 9.10%
1941-1 -0.86% 3 -0.65% 4 -0.98% 5 -0.22% 6 -2.70%
1945-1 1.24% 2 -0.52% 3 -0.18% 4 0.94% 5 1.48%
1949-1 0.25% 6 -0.56% 1 -0.19% 2 0.25% 3 -0.25%
Avg 1.17% -0.09% -0.64% 0.84% 1.28%
 
1953-1 0.57% 2 0.08% 3 0.57% 5 0.41% 1 1.63%
1957-1 0.76% 1 -2.65% 2 2.89% 3 1.14% 5 2.14%
1961-1 0.01% 1 -0.14% 2 -0.07% 3 -0.53% 4 -0.72%
1965-1 0.17% 3 0.10% 5 -0.25% 1 -0.21% 2 -0.18%
1969-1 -1.15% 1 -0.32% 2 0.36% 3 0.58% 5 -0.53%
Avg 0.08% -0.59% 0.70% 0.28% 0.47%
 
1973-1 -0.91% 2 2.04% 3 -0.35% 4 -1.39% 5 -0.61%
1977-1 0.21% 5 -0.67% 1 -1.55% 2 0.30% 3 -1.72%
1981-1 1.57% 2 0.44% 3 0.84% 5 1.01% 1 3.85%
1985-1 -0.58% 1 0.16% 2 0.93% 3 -0.18% 5 0.33%
1989-1 0.48% 1 0.05% 2 -0.63% 3 0.70% 4 0.59%
Avg 0.15% 0.40% -0.15% 0.09% 0.49%
 
1993-1 0.29% 3 0.15% 5 -0.25% 1 -0.02% 2 0.17%
1997-1 -1.70% 1 0.44% 2 0.09% 3 0.40% 5 -0.78%
2001-1 -0.68% 2 -1.83% 3 1.03% 4 -0.07% 5 -1.54%
2005-1 0.21% 5 -0.85% 1 0.00% 2 -0.64% 3 -1.28%
2009-1 -0.05% 2 0.45% 3 -1.72% 5 0.38% 1 -0.95%
Avg -0.39% -0.33% -0.17% 0.01% -0.88%
 
SPX summary for Presidential Year 1 1929 - 2009
Averages 0.22% -0.20% -0.20% 0.35% 0.17%
% Winners 62% 48% 43% 62% 38%
MDD 11/26/1929 4.40% -- 11/27/1933 3.49% -- 11/29/1941 2.67%
 
SPX summary for all years 1928 - 2012
Averages 0.14% 0.03% 0.04% 0.20% 0.40%
% Winners 62% 52% 54% 57% 52%
MDD 11/28/1931 7.09% -- 11/30/1987 6.53% -- 11/29/1950 4.49%

Report for the 3 days before Thanksgiving and 1 day after. Day1 = the day after
The number following the year represents its position in the Presidential Cycle.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.

Year 1
  Day4 Day3 Day2 Day1 Totals
1965-1 -0.09% 1 0.04% 2 -0.02% 3 0.47% 5 0.40%
1969-1 -0.55% 1 -1.24% 2 0.05% 3 -0.11% 5 -1.86%
 
1973-1 -2.35% 1 0.00% 2 -2.44% 3 0.77% 5 -4.03%
1977-1 0.13% 1 0.57% 2 0.79% 3 0.57% 5 2.05%
1981-1 -0.30% 1 0.52% 2 0.49% 3 0.50% 5 1.22%
1985-1 -0.33% 1 0.24% 2 0.81% 3 0.30% 5 1.01%
1989-1 -0.22% 1 -0.34% 2 0.22% 3 0.33% 5 -0.02%
Avg -0.61% 0.20% -0.03% 0.49% 0.05%
 
1993-1 -1.79% 1 1.18% 2 0.85% 3 0.22% 5 0.47%
1997-1 -2.09% 1 0.13% 2 0.35% 3 0.38% 5 -1.23%
2001-1 1.89% 1 -2.79% 2 -0.29% 3 1.50% 5 0.31%
2005-1 0.66% 1 0.53% 2 0.28% 3 0.13% 5 1.60%
2009-1 1.40% 1 -0.31% 2 0.32% 3 -1.73% 5 -0.33%
Avg 0.01% -0.25% 0.30% 0.10% 0.16%
 
OTC summary for Presidential Year 1 1965 - 2009
Averages -0.30% -0.12% 0.12% 0.28% -0.03%
% Winners 33% 58% 75% 83% 58%
MDD 11/21/1973 4.73% -- 11/21/2001 3.07% -- 11/24/1997 2.09%
 
OTC summary for all years 1963 - 2012
Averages -0.06% -0.21% 0.34% 0.47% 0.55%
% Winners 48% 51% 76% 80% 64%
 
SPX Presidential Year 1
  Day4 Day3 Day2 Day1 Totals
1953-1 -0.33% 1 0.57% 2 0.08% 3 0.57% 5 0.90%
1957-1 0.76% 1 -2.65% 2 2.89% 3 1.14% 5 2.14%
1961-1 0.14% 1 0.08% 2 -0.11% 3 0.20% 5 0.31%
1965-1 -0.65% 1 0.15% 2 0.17% 3 0.10% 5 -0.23%
1969-1 -1.15% 1 -0.32% 2 0.36% 3 0.58% 5 -0.53%
Avg -0.24% -0.43% 0.68% 0.52% 0.52%
 
1973-1 -3.05% 1 -2.04% 2 1.11% 3 -0.32% 5 -4.29%
1977-1 -0.08% 1 0.88% 2 0.42% 3 0.21% 5 1.42%
1981-1 -0.09% 1 1.57% 2 0.44% 3 0.84% 5 2.76%
1985-1 -0.58% 1 0.16% 2 0.93% 3 -0.18% 5 0.33%
1989-1 -0.66% 1 0.07% 2 0.68% 3 0.60% 5 0.69%
Avg -0.89% 0.13% 0.72% 0.23% 0.18%
 
1993-1 -0.75% 1 0.41% 2 0.29% 3 0.15% 5 0.10%
1997-1 -1.70% 1 0.44% 2 0.09% 3 0.40% 5 -0.78%
2001-1 1.09% 1 -0.73% 2 -0.49% 3 1.17% 5 1.04%
2005-1 0.53% 1 0.51% 2 0.35% 3 0.21% 5 1.59%
2009-1 1.36% 1 -0.05% 2 0.45% 3 -1.72% 5 0.04%
Avg 0.10% 0.12% 0.14% 0.04% 0.40%
 
SPX summary for Presidential Year 1 1953 - 2009
Averages -0.34% -0.06% 0.51% 0.26% 0.37%
% Winners 33% 67% 87% 80% 73%
MDD 11/20/1973 5.03% -- 11/26/1957 2.65% -- 11/27/2009 1.72%
 
SPX summary for all years 1953 - 2012
Averages -0.11% 0.09% 0.35% 0.38% 0.71%
% Winners 44% 59% 79% 75% 67%


Money Supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth continued to declined last week.

SPX versus M2 Money Supply Chart


Conclusion

The breadth indicators failed again to confirm the new index highs, seasonality for next week is mixed, but the Fed continues to chip in $85B a month.

I expect the major averages to be higher on Friday November 29 than they were on Friday November 22.

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In his latest newsletter titled "Stories", Jerry Minton discusses explanations for some market behavior. You can sign up for his free newsletter at: http://www.alphaim.net/

Good Luck,

YTD W 21/L 14/T 12

 


 

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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