Technical Market Report for February 27, 2016

By: Mike Burk | Sat, Feb 27, 2016
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The good news is:
• The market has had 2 consecutive winning weeks with the secondaries outperforming the blue chips.


The Negatives

New lows have remained a little high, especially on the NASDAQ where new lows outnumbered new highs every day last week except Monday.

The first chart covers the past 6 months showing the NASDAQ composite (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 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 50%, neutral level.

OTC HL Ratio rose a bit last week, but remained below the neutral level.

OTC and OTC HL Ratio Chart


The positives

On the NYSE new highs outnumbered new lows on 3 of the 5 days.

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

NY HL Ratio managed to climb into positive territory last week.

SPX and 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 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).

NY NL continued its sharp move upward.

SPX and NY NL Chart

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

OTC NL is showing a similar pattern to NY NL.

OTC and OTC NL Chart

The next chart covers the past 4 years showing the SPX in red and a 5% trend (39 day EMA) of NYSE volume of advancing issues (NY UV) in green. Dashed vertical lines have been drawn on the 1st trading day of each year.

Since the 1st of the year we have been seeing the highest volume of advancing issues in over 4 years.

SPX and NY UV Chart


Seasonality

Next week includes the last trading day of February and the 1st 4 trading days of March 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 2015 while SPX data runs from 1928 to 2015. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

The coming week has been volatile with large gains some years and large losses in other years.

Report for the last day of February and first 4 days of March.
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
  Day1 Day1 Day2 Day3 Day4 Totals
1964-4 -0.27% 5 0.56% 1 -0.05% 2 0.13% 3 0.00% 4 0.38%
1968-4 0.02% 4 -0.94% 5 -0.63% 1 0.59% 2 -3.92% 3 -4.87%
1972-4 0.35% 2 0.73% 3 0.23% 4 0.48% 5 0.54% 1 2.33%
 
1976-4 -1.30% 5 -0.01% 1 0.32% 2 -0.41% 3 -0.58% 4 -1.98%
1980-4 0.36% 5 -0.73% 1 -0.96% 2 -1.56% 3 -2.81% 4 -5.70%
1984-4 0.01% 3 0.37% 4 0.80% 5 -0.66% 1 -0.64% 2 -0.11%
1988-4 0.98% 1 0.10% 2 0.83% 3 0.44% 4 0.36% 5 2.71%
1992-4 -0.08% 5 0.32% 1 -0.19% 2 -0.62% 3 -1.32% 4 -1.90%
Avg -0.01% 0.01% 0.16% -0.56% -1.00% -1.40%
 
1996-4 -0.68% 4 -1.27% 5 -0.11% 1 1.10% 2 -0.46% 3 -1.42%
2000-4 2.60% 2 1.86% 3 -0.62% 4 3.37% 5 -0.20% 1 7.01%
2004-4 -0.14% 5 1.38% 1 -0.88% 2 -0.31% 3 1.07% 4 1.12%
2008-4 -2.58% 5 -0.57% 1 0.07% 2 0.55% 3 -2.30% 4 -4.82%
2012-4 -0.67% 3 0.74% 4 -0.43% 5 -0.86% 1 -1.36% 2 -2.57%
Avg -0.29% 0.43% -0.39% 0.77% -0.65% -0.14%
 
OTC summary for Presidential Year 4 1964 - 2012
Averages -0.11% 0.20% -0.12% 0.17% -0.89% -0.76%
% Winners 46% 62% 38% 54% 23% 38%
MDD 3/6/1980 5.94% -- 3/6/1968 4.86% -- 3/6/2008 4.76%
 
OTC summary for all years 1963 - 2015
Averages -0.10% 0.19% 0.02% 0.34% -0.16% 0.28%
% Winners 47% 63% 51% 68% 54% 58%
MDD 3/5/2009 6.60% -- 3/6/1980 5.94% -- 3/6/1968 4.86%
 
SPX Presidential Year 4
  Day1 Day1 Day2 Day3 Day4 Totals
1928-4 0.58% 3 0.23% 4 0.00% 5 0.69% 6 0.86% 1 2.37%
1932-4 -0.72% 1 0.72% 2 4.31% 3 0.00% 4 0.11% 5 4.43%
 
1936-4 -0.34% 6 1.51% 1 1.42% 2 0.27% 3 0.13% 4 2.99%
1940-4 -0.16% 4 -0.58% 5 0.17% 6 0.08% 1 0.50% 2 0.00%
1944-4 -0.59% 2 0.42% 3 0.08% 4 0.17% 5 0.00% 6 0.09%
1948-4 0.50% 6 0.50% 1 0.64% 2 0.07% 3 -0.64% 4 1.08%
1952-4 -0.13% 5 0.09% 6 0.04% 1 1.67% 2 0.13% 3 1.80%
Avg -0.14% 0.39% 0.47% 0.45% 0.02% 1.19%
 
1956-4 -0.20% 3 0.44% 4 0.59% 5 0.55% 1 -0.04% 2 1.34%
1960-4 -0.07% 1 -0.20% 2 -0.70% 3 -1.51% 4 -0.38% 5 -2.86%
1964-4 0.23% 5 0.22% 1 0.32% 2 -0.19% 3 -0.01% 4 0.57%
1968-4 -0.80% 4 -0.28% 5 -1.34% 1 -0.23% 2 1.76% 3 -0.89%
1972-4 0.36% 2 0.73% 3 -0.03% 4 0.58% 5 0.77% 1 2.41%
Avg -0.10% 0.18% -0.23% -0.16% 0.42% 0.11%
 
1976-4 -0.40% 5 0.31% 1 0.54% 2 -0.58% 3 -1.06% 4 -1.19%
1980-4 1.17% 5 -1.02% 1 0.25% 2 -1.46% 3 -2.23% 4 -3.30%
1984-4 0.15% 3 0.72% 4 0.66% 5 -0.85% 1 -1.04% 2 -0.35%
1988-4 2.04% 1 -0.22% 2 0.28% 3 -0.04% 4 -0.22% 5 1.85%
1992-4 -0.28% 5 -0.06% 1 0.10% 2 -0.85% 3 -0.69% 4 -1.79%
Avg 0.54% -0.05% 0.37% -0.76% -1.05% -0.95%
 
1996-4 -0.67% 4 0.62% 5 1.00% 1 0.77% 2 -0.58% 3 1.13%
2000-4 1.36% 2 0.94% 3 0.19% 4 1.98% 5 -1.27% 1 3.20%
2004-4 0.00% 5 0.96% 1 -0.59% 2 0.17% 3 0.33% 4 0.87%
2008-4 -2.71% 5 0.05% 1 -0.34% 2 0.52% 3 -2.20% 4 -4.68%
2012-4 -0.47% 3 0.62% 4 -0.32% 5 -0.39% 1 -1.54% 2 -2.11%
Avg -0.50% 0.64% -0.01% 0.61% -1.05% -0.32%
 
SPX summary for Presidential Year 4 1928 - 2012
Averages -0.05% 0.31% 0.33% 0.06% -0.33% 0.32%
% Winners 41% 73% 68% 55% 36% 64%
MDD 3/6/2008 4.63% -- 3/6/1980 4.41% -- 3/4/1960 2.83%
 
SPX summary for all years 1928 - 2015
Averages 0.04% 0.15% 0.17% 0.23% 0.10% 0.67%
% Winners 56% 64% 55% 62% 53% 65%
MDD 3/5/2009 9.34% -- 3/6/2008 4.63% -- 3/6/1980 4.41%


Money supply (M2)

The charts were provided by Gordon Harms. Money supply growth leveled off last week.

SPX and M2 Money Supply Chart


Conclusion

New lows continued to decline and the secondaries continued to lead the blue chips upward last week.

I expect the major averages to be higher on Friday March 4 than they were on Friday February 26.

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Good Luck,

YTD W 5 / L 3 / 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.

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