Technical Market Report for January 23, 2016

By: Mike Burk | Sat, Jan 23, 2016
Print Email

The good news is:
• New lows disappeared last week. The decline we have been experiencing since late December is over.


The Negatives

Last Wednesday there were 1395 new lows on the NYSE and 908 on the NASDAQ. Those numbers are so high that a retest of last week's lows is likely in the next several months.


The positives

There were 1395 new lows on the NYSE last Wednesday and 27 on Friday, a 98% decline in 2 days.

There were 908 new lows on the NASDAQ last Wednesday and 60 on Friday, a 93% decline in 2 days.

This is wonderful example of how new lows disappear at a bottom.

The chart below covers the past 3 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue. NY NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good). Dashed vertical lines have been drawn on the 1st trading day of each month.

I shortened the duration of this chart so you could see the sharp upward movement of NY NL.

SPX and NY NL Chart

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

Same pattern.

OTC and OTC NL Chart

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

NY HL Ratio hit 1.2% Wednesday, its lowest level in a long time, but is moving sharply upward now.

SPX and NY HL Ratio Chart

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

The pattern is similar for OTC HL Ratio.

OT and OTC HL Ratio Chart


Seasonality

Next week includes the last 5 trading days of January during the 4th year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for that period.

OTC data covers the period from 1963 to 2014 while SPX data runs from 1928 to 2014 There are summaries for both the 4th year of the Presidential Cycle and all years combined.

Average returns for the coming week have been modestly positive.

Report for the last 5 days of January.
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 4
  Day5 Day4 Day3 Day2 Day1 Totals
1964-4 0.00% 1 -0.16% 2 0.27% 3 -0.35% 4 0.00% 5 -0.24%
1968-4 -0.08% 4 -0.34% 5 0.50% 1 0.35% 2 -0.86% 3 -0.44%
1972-4 -0.16% 2 0.08% 3 0.84% 4 0.91% 5 0.36% 1 2.03%
 
1976-4 -0.25% 1 -0.34% 2 -0.15% 3 1.80% 4 1.04% 5 2.10%
1980-4 0.29% 5 0.63% 1 -0.26% 2 0.63% 3 0.28% 4 1.57%
1984-4 -0.53% 3 -0.63% 4 -0.88% 5 -1.45% 1 -0.30% 2 -3.78%
1988-4 0.86% 1 -0.38% 2 0.17% 3 0.75% 4 0.67% 5 2.08%
1992-4 -0.59% 1 0.05% 2 -0.80% 3 0.82% 4 -0.19% 5 -0.71%
Avg -0.04% -0.13% -0.38% 0.51% 0.30% 0.25%
 
1996-4 -0.72% 4 0.48% 5 0.14% 1 0.84% 2 0.81% 3 1.56%
2000-4 1.74% 2 -2.34% 3 -0.74% 4 -3.78% 5 1.37% 1 -3.75%
2004-4 1.41% 1 -1.75% 2 -1.83% 3 -0.44% 4 -0.10% 5 -2.71%
2008-4 -1.47% 5 1.02% 1 0.35% 2 -0.38% 3 1.74% 4 1.25%
2012-4 1.14% 3 -0.46% 4 0.40% 5 -0.16% 1 0.07% 2 0.98%
Avg 0.42% -0.61% -0.34% -0.78% 0.78% -0.53%
 
OTC summary for Presidential Year 4 1964-2012
Averages 0.13% -0.32% -0.15% -0.04% 0.38% 0.00%
% Winners 38% 38% 54% 54% 62% 54%
MDD 1/28/2000 6.73% -- 1/30/2004 4.07% -- 1/31/1984 3.73%
 
OTC summary for all years 1963 - 2015
Averages -0.03% 0.15% 0.13% -0.02% 0.21% 0.42%
% Winners 46% 60% 61% 56% 62% 57%
MDD 1/28/2000 6.73% -- 1/30/2009 5.26% -- 1/30/1970 4.76%
 
SPX Presidential Year 4
  Day5 Day4 Day3 Day2 Day1 Totals
1928-4 0.63% 4 0.34% 5 -0.62% 6 -0.51% 1 0.46% 2 0.29%
1932-4 1.34% 2 -1.93% 3 -1.47% 4 -1.12% 5 -0.63% 6 -3.81%
 
1936-4 0.29% 1 0.14% 2 1.00% 3 -0.49% 4 1.63% 5 2.57%
1940-4 -0.08% 5 0.08% 6 0.00% 1 -0.58% 2 -0.33% 3 -0.91%
1944-4 -1.01% 3 -0.17% 4 0.60% 5 0.00% 6 0.34% 1 -0.25%
1948-4 0.14% 2 1.05% 3 1.10% 4 0.20% 5 0.07% 6 2.56%
1952-4 0.16% 6 0.08% 1 -0.16% 2 -1.38% 3 -0.37% 4 -1.67%
Avg -0.10% 0.24% 0.51% -0.45% 0.27% 0.46%
 
1956-4 0.16% 3 -0.59% 4 -0.25% 5 0.35% 1 0.74% 2 0.39%
1960-4 -1.05% 1 0.14% 2 -0.25% 3 -1.04% 4 -0.93% 5 -3.12%
1964-4 -0.04% 1 0.03% 2 -0.61% 3 0.09% 4 0.44% 5 -0.09%
1968-4 0.14% 4 0.16% 5 -0.11% 1 -0.49% 2 -0.70% 3 -1.00%
1972-4 0.20% 2 -0.27% 3 0.98% 4 0.64% 5 -0.21% 1 1.33%
Avg -0.12% -0.11% -0.05% -0.09% -0.13% -0.50%
 
1976-4 0.47% 1 -0.61% 2 -0.55% 3 1.60% 4 0.75% 5 1.67%
1980-4 -0.08% 5 1.09% 1 -0.68% 2 0.99% 3 -0.90% 4 0.42%
1984-4 -0.66% 3 -0.36% 4 -0.18% 5 -0.65% 1 0.33% 2 -1.53%
1988-4 2.30% 1 -1.03% 2 -0.08% 3 1.57% 4 1.49% 5 4.25%
1992-4 -0.12% 1 -0.01% 2 -1.11% 3 0.31% 4 -0.69% 5 -1.61%
Avg 0.38% -0.18% -0.52% 0.76% 0.20% 0.64%
 
1996-4 -0.47% 4 0.74% 5 0.42% 1 0.95% 2 0.93% 3 2.57%
2000-4 0.58% 2 -0.42% 3 -0.39% 4 -2.75% 5 2.52% 1 -0.46%
2004-4 1.21% 1 -0.98% 2 -1.36% 3 0.50% 4 -0.26% 5 -0.89%
2008-4 -1.59% 5 1.76% 1 0.62% 2 -0.48% 3 1.68% 4 1.98%
2012-4 0.87% 3 -0.58% 4 -0.16% 5 -0.25% 1 -0.05% 2 -0.16%
Avg 0.12% 0.11% -0.18% -0.41% 0.96% 0.61%
 
SPX summary for Presidential Year 4 1928 - 2012
Averages 0.15% -0.06% -0.15% -0.12% 0.29% 0.12%
% Winners 59% 50% 27% 45% 55% 45%
MDD 1/30/1932 5.05% -- 1/28/2000 3.53% -- 1/29/1960 3.08%
 
SPX summary for all years 1928 - 2015
Averages -0.03% 0.13% 0.05% 0.09% 0.23% 0.46%
% Winners 52% 52% 49% 60% 61% 57%
MDD 1/29/1938 6.33% -- 1/30/2009 5.52% -- 1/30/1932 5.05%


Money supply (M2) & Yield curve

The charts were provided by Gordon Harms. Money supply growth moved sharply upward last week. Perhaps PPT intervention.

S&P500 and M2 Money Supply Charts


Conclusion

The new low disappearing act we have been waiting for occurred last week. The rally that began Thursday or Friday should continue for, at least, several weeks.

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

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.stockmarket-ta.com/signup.html. If it is not for you, reply with REMOVE in the subject line.

These reports are archived at: http://www.safehaven.com/

Good Luck,

YTD W 2 / L 1 / T 0

 


 

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.

Copyright © 2003-2017 Mike Burk

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com