Technical Market Report for April 4, 2015

By: Mike Burk | Sat, Apr 4, 2015
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The good news is:
• The small caps have been outperforming the blue chips.


The negatives

In a strong market new highs will often increase on down days. Currently, that is not the case.

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.

The SPX was up slightly last week while NY NH fell.

NY NH Chart

The next chart is similar to the one above except is shows the NASDAQ composite (OTC) in blue and OTC NH has been calculated from NASDAQ data.

The OTC was down 0.09% last week while OTC NH fell pretty sharply.

OTC NH Chart


The positives

New lows remained at insignificant levels last week.

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 for the indicator.

OTC HL Ratio recovered to a comfortable 66% last week.

OTC HL Ratio Chart

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

NY HL Ratio recovered to a strong 81%.

NY HL Ratio Chart


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of April 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 2nd Friday of April 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 been mixed, but a little stronger during the 3rd year of the Presidential Cycle than other times.

Report for the week before the 2nd Friday of April.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.

OTC Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1963-3 0.43% -0.34% 0.03% -0.28% 0.25% 0.09%
1967-3 -0.74% -1.20% 0.29% 0.57% 0.30% -0.78%
1971-3 0.45% -0.02% 0.21% 0.56% 0.25% 1.45%
 
1975-3 -0.52% 0.26% 1.17% 0.48% 0.73% 2.10%
1979-3 -0.79% -0.17% 0.49% 0.20% 0.37% 0.10%
1983-3 1.01% 0.71% 1.17% 1.04% 1.00% 4.94%
1987-3 0.10% -0.86% 0.21% -0.67% -0.25% -1.47%
1991-3 -0.03% -0.64% -0.35% 1.74% 0.46% 1.19%
Avg -0.05% -0.14% 0.54% 0.56% 0.46% 1.37%
 
1995-3 -0.22% -0.61% -1.11% 0.30% 0.54% -1.10%
1999-3 0.22% -0.59% -2.95% 0.59% -1.51% -4.24%
2003-3 0.43% -0.47% -1.89% 0.65% -0.50% -1.77%
2007-3 1.06% -0.05% -0.26% -0.21% 0.84% 1.38%
2011-3 -0.01% 0.07% 0.31% -0.13% -0.56% -0.33%
Avg 0.30% -0.33% -1.18% 0.24% -0.24% -1.21%
 
OTC summary for Presidential Year 3 1963 - 2011
Avg 0.11% -0.30% -0.21% 0.37% 0.15% 0.12%
Win% 54% 23% 62% 69% 69% 54%
 
OTC summary for all years 1963 - 2014
Avg -0.01% -0.02% -0.02% 0.14% -0.28% -0.20%
Win% 60% 56% 56% 56% 52% 60%
 
SPX Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1955-3 0.27% 0.59% 0.13% 0.21% 0.45% 1.65%
1959-3 0.28% -0.21% -0.48% -0.07% 0.09% -0.39%
1963-3 0.47% 0.07% -0.32% -0.04% 0.49% 0.67%
1967-3 -1.25% 0.73% -0.11% 0.77% 1.08% 1.21%
1971-3 0.76% 0.10% 0.38% 0.15% -0.03% 1.36%
Avg 0.11% 0.25% -0.08% 0.20% 0.42% 0.90%
 
1975-3 -0.66% 0.80% 2.28% 1.12% 0.49% 4.04%
1979-3 -0.86% 0.12% 0.45% -0.41% -0.05% -0.75%
1983-3 1.50% 0.44% 0.61% 0.85% 0.40% 3.81%
1987-3 0.51% -1.74% 0.19% -1.48% -0.13% -2.64%
1991-3 0.88% -1.35% -0.11% 1.20% 0.73% 1.36%
Avg 0.27% -0.35% 0.69% 0.26% 0.29% 1.16%
 
1995-3 -0.61% -0.15% -0.09% 0.07% 0.63% -0.14%
1999-3 0.76% -0.65% -1.58% -0.42% -0.29% -2.19%
2003-3 0.12% -0.19% -1.40% 0.65% -0.38% -1.19%
2007-3 1.08% 0.20% 0.07% -0.12% 0.93% 2.16%
2011-3 0.03% -0.02% 0.22% -0.15% -0.40% -0.32%
Avg 0.28% -0.16% -0.56% 0.01% 0.10% -0.34%
 
SPX summary for Presidential Year 3 1955 - 2011
Avg 0.22% -0.08% 0.02% 0.15% 0.27% 0.57%
Win% 73% 53% 53% 53% 60% 53%
 
SPX summary for all years 1953 - 2014
Avg 0.14% 0.10% 0.07% -0.03% -0.10% 0.19%
Win% 61% 56% 56% 53% 52% 56%


Money supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth has leveled off to its trend.

SPX and M2 Money Supply Charts


Conclusion

Indications from the breadth indicators and seasonality are indecisive, however relative strength in the secondaries over the blue chips is a positive.

I expect the major averages to be higher on Friday April 10 than they were on Thursday April 2.

Last the OTC was down slightly while the other major broad based indices were up so I am calling last weeks positive forecast a tie.

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Good Luck,

YTD W 5 / L 5 / T 3

 


 

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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