Technical Market Report for March 21, 2015

By: Mike Burk | Sat, Mar 21, 2015
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The good news is:
• The small caps and mid caps finished the week at all time highs and the blue chips were not far behind.


The negatives

Negatives are hard to find. New highs have been coming up short for a while, but that changed last week. Seasonality is positive until it takes a little break in mid May.


The positives

Everything is in the plus column. New highs have been expanding, new lows shrinking and the secondaries are leading the way up.

The chart below covers the past 6 months showing the NASDAQ composite (OTC) in blue and a 40% trend of NASDAQ new highs divided by (new highs + new lows), OTC HL Ratio, in red. Dashed vertical lines have been drawn on the 1st trading day of each month. Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the neutral 50% level for the indicator.

OTC HL Ratio recovered continued to rise sharply last week.

OTC HL Ratio Chart

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

NY HL Ratio also moved sharply upward last week.

NY HL Ratio Chart

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green

NY NH has been falling for the past 6 weeks but began a recovery last week.

NY 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 and OTC NH both finished the week at their highest levels for the period.

OTC and NY NH Chart


Seasonality

Next week includes the first 5 trading days prior to the 4th Friday of March during the 3rd year of the Presidential Cycle.

The tables below show the daily change, on a percentage basis for the 5 trading days prior to the 4th Friday of March during the 3rd year of the Presidential Cycle.

OTC data covers the period from 1963 to 2014 while SPX data runs from 1953 through 2014. There are summaries for both the 3rd 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 stronger during the 3rd year of the Presidential Cycle than other years.

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

OTC Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1963-3 0.39% -0.29% -0.13% 0.35% 0.06% 0.39%
1967-3 0.66% 0.16% 0.69% 0.20% 0.32% 2.04%
1971-3 -0.38% -0.25% -0.39% -0.10% 0.45% -0.66%
 
1975-3 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1979-3 0.46% -0.27% 0.50% 0.49% 0.38% 1.57%
1983-3 0.50% 0.45% 0.65% 0.41% 0.19% 2.20%
1987-3 -0.36% 0.02% -0.15% 0.28% -0.42% -0.63%
1991-3 0.00% -0.74% 0.71% -0.32% -0.10% -0.45%
Avg 0.15% -0.14% 0.43% 0.22% 0.01% 0.67%
 
1995-3 0.27% -0.09% -0.08% 0.28% 0.90% 1.27%
1999-3 -1.06% -3.05% 1.83% 2.94% -0.64% 0.02%
2003-3 -3.66% 1.55% -0.26% -0.23% -1.06% -3.66%
2007-3 0.92% 0.58% 1.98% -0.17% -0.11% 3.19%
2011-3 1.83% -0.31% 0.54% 1.41% 0.24% 3.72%
Avg -0.34% -0.26% 0.80% 0.85% -0.14% 0.91%
 
OTC summary for Presidential Year 3 1963 - 2011
Avg -0.04% -0.19% 0.49% 0.46% 0.02% 0.75%
Win% 58% 42% 58% 67% 58% 67%
 
OTC summary for all years 1963 - 2014
Avg 0.01% -0.20% 0.13% 0.18% 0.03% 0.15%
Win% 51% 42% 53% 56% 53% 58%
 
SPX Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1955-3 -0.64% 0.61% 1.30% 0.79% 0.08% 2.15%
Avg -0.64% 0.61% 1.30% 0.79% 0.08% 2.15%
 
1959-3 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1963-3 -0.49% -0.21% 0.73% -0.15% 0.52% 0.40%
1967-3 -0.08% 0.04% -0.20% -0.03% -0.55% -0.82%
1971-3 -0.39% -0.34% -0.66% -0.01% 0.34% -1.05%
1975-3 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Avg -0.32% -0.17% -0.04% -0.06% 0.10% -0.49%
 
1979-3 0.37% -0.55% 0.75% 0.41% -0.07% 0.91%
1983-3 0.86% -0.35% 1.43% 0.37% -0.46% 1.85%
1987-3 1.00% 0.16% -0.42% 0.18% -1.60% -0.67%
1991-3 -0.40% -1.48% 0.36% -0.36% 0.25% -1.64%
1995-3 0.13% -0.22% 0.12% 0.06% 1.01% 1.10%
Avg 0.39% -0.49% 0.45% 0.13% -0.17% 0.31%
 
1999-3 -0.18% -2.69% 0.52% 1.69% -0.56% -1.22%
2003-3 -3.52% 1.22% -0.55% -0.16% -0.58% -3.60%
2007-3 1.09% 0.63% 1.71% -0.03% 0.11% 3.51%
2011-3 1.50% -0.36% 0.29% 0.93% 0.32% 2.69%
 
SPX summary for Presidential Year 3 1955 - 2011
Avg -0.06% -0.27% 0.41% 0.28% -0.09% 0.28%
Win% 46% 38% 69% 54% 54% 54%
 
SPX summary for all years 1953 - 2014
Avg 0.07% -0.11% 0.09% -0.02% -0.07% -0.04%
Win% 43% 46% 44% 41% 54% 39%

Conclusion

Everything that matters turned upward last week. This rally should be good for 2 months.

I expect the major averages to be higher on Friday March 27 than they were on Friday March 20.

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Good Luck,

YTD W 5 / L 4 / T 2

 


 

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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