Technical Market Report for April 23, 2016

By: Mike Burk | Sat, Apr 23, 2016
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The good news is:
• The secondaries have been outperforming the blue chips and the number of new lows has been insignificant.


The Negatives

There are not any serious negatives.

On the NYSE new lows have been in single digits, a little higher on the NASDAQ, but nothing worrisome.

The NASDAQ composite (OTC) was down a little last week, but the Russell 2000 small cap index was the strongest of what I consider the major indices.

New highs have come up a little short, but relatively are the strongest we have seen in a while.


The positives

While new highs have been disappointing, new lows have disappeared and nothing really bad will happen without a significant increase in new lows.

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 50%, neutral level.

OTC HL Ratio declined slightly but remains very strong at 71%.

OTC and OTC HL Ratio Chart

The next 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 finished the week at a sensational 92%.

SPX and NY HL Ratio Chart


Seasonality

Next week includes the last 5 trading days of April during the 4th year of the Presidential Cycle.

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.

In these tables the OTC has been stronger than the SPX. The opposite is what we have been observing.

Report for the last 5 days of April.
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 -0.20% 5 -1.17% 1 -0.03% 2 0.57% 3 -0.49% 4 -1.32%
1968-4 0.25% 3 0.95% 4 1.87% 5 0.30% 1 0.30% 2 3.68%
1972-4 -0.83% 1 -0.80% 2 0.06% 3 0.07% 4 0.24% 5 -1.26%
 
1976-4 -0.03% 1 -0.65% 2 0.36% 3 0.28% 4 -0.52% 5 -0.57%
1980-4 1.29% 4 -0.56% 5 0.45% 1 0.58% 2 0.46% 3 2.23%
1984-4 0.05% 2 -0.07% 3 0.83% 4 0.39% 5 0.22% 1 1.43%
1988-4 0.33% 1 0.68% 2 0.22% 3 0.03% 4 0.12% 5 1.38%
1992-4 -0.55% 5 -1.04% 1 -1.17% 2 1.72% 3 1.53% 4 0.50%
Avg 0.22% -0.33% 0.14% 0.60% 0.36% 0.99%
 
1996-4 0.86% 3 0.63% 4 0.23% 5 0.11% 1 0.19% 2 2.02%
2000-4 -4.43% 1 6.57% 2 -2.19% 3 3.96% 4 2.30% 5 6.21%
2004-4 -0.63% 1 -0.21% 2 -2.12% 3 -1.55% 4 -1.97% 5 -6.48%
2008-4 0.99% 4 -0.25% 5 0.06% 1 0.07% 2 -0.55% 3 0.32%
2012-4 -0.30% 2 2.30% 3 0.69% 4 0.61% 5 -0.74% 1 2.56%
Avg -0.70% 1.81% -0.66% 0.64% -0.15% 0.93%
 
OTC summary for Presidential Year 4 1964 - 2012
Averages -0.25% 0.49% -0.06% 0.55% 0.08% 0.82%
% Winners 46% 38% 69% 92% 62% 69%
MDD 4/30/2004 6.32% -- 4/24/2000 4.43% -- 4/28/1992 2.73%
 
OTC summary for all years 1963 - 2015
Averages -0.10% -0.02% 0.00% 0.20% 0.20% 0.27%
% Winners 57% 47% 68% 66% 66% 58%
MDD 4/29/1970 7.72% -- 4/30/2004 6.32% -- 4/29/1999 4.66%
 
SPX Presidential Year 4
  Day5 Day4 Day3 Day2 Day1 Totals
1928-4 0.42% 3 0.72% 4 1.08% 5 0.36% 6 0.00% 1 2.57%
1932-4 1.49% 2 2.45% 3 -3.83% 4 -3.32% 5 0.00% 6 -3.20%
 
1936-4 0.55% 6 -3.86% 1 -0.14% 2 -2.94% 3 1.77% 4 -4.61%
1940-4 0.08% 4 -0.90% 5 0.08% 6 0.25% 1 0.58% 2 0.09%
1944-4 0.17% 2 0.60% 3 0.43% 4 0.51% 5 0.00% 6 1.70%
1948-4 -1.40% 1 0.06% 2 0.13% 3 -0.32% 4 -0.26% 5 -1.78%
1952-4 0.47% 5 0.17% 6 -0.13% 1 -0.25% 2 -0.72% 3 -0.47%
Avg -0.02% -0.79% 0.07% -0.55% 0.27% -1.01%
 
1956-4 -0.82% 2 -0.36% 3 0.85% 4 1.05% 5 0.81% 1 1.54%
1960-4 -1.01% 1 0.33% 2 0.00% 3 -0.87% 4 -0.35% 5 -1.90%
1964-4 -0.78% 5 -0.50% 1 0.69% 2 -0.25% 3 -0.30% 4 -1.14%
1968-4 0.15% 3 0.31% 4 0.30% 5 0.26% 1 0.13% 2 1.15%
1972-4 -0.64% 1 -0.99% 2 -0.21% 3 0.15% 4 0.58% 5 -1.12%
Avg -0.62% -0.24% 0.33% 0.07% 0.18% -0.30%
 
1976-4 0.14% 1 -0.56% 2 0.27% 3 0.00% 4 -0.48% 5 -0.63%
1980-4 0.65% 4 0.73% 5 0.46% 1 0.21% 2 0.41% 3 2.44%
1984-4 0.81% 2 0.37% 3 1.04% 4 -0.26% 5 0.10% 1 2.06%
1988-4 0.89% 1 0.56% 2 -0.05% 3 -0.45% 4 -0.49% 5 0.46%
1992-4 -0.63% 5 -0.14% 1 0.16% 2 0.71% 3 0.71% 4 0.82%
Avg 0.37% 0.19% 0.38% 0.04% 0.05% 1.03%
 
1996-4 -0.22% 3 0.42% 4 0.09% 5 0.11% 1 0.00% 2 0.40%
2000-4 -0.32% 1 3.30% 2 -1.09% 3 0.27% 4 -0.85% 5 1.30%
2004-4 -0.44% 1 0.23% 2 -1.38% 3 -0.76% 4 -0.59% 5 -2.95%
2008-4 0.64% 4 0.65% 5 -0.11% 1 -0.39% 2 -0.38% 3 0.42%
2012-4 0.37% 2 1.36% 3 0.67% 4 0.24% 5 -0.39% 1 2.25%
Avg 0.01% 1.19% -0.36% -0.11% -0.44% 0.28%
 
SPX summary for Presidential Year 4 1928 - 2012
Averages 0.03% 0.23% -0.03% -0.26% 0.01% -0.03%
% Winners 59% 68% 59% 50% 36% 59%
MDD 4/29/1932 7.02% -- 4/29/1936 6.82% -- 4/30/2004 2.92%
 
SPX summary for all years 1928 - 2015
Averages -0.19% 0.05% -0.09% -0.01% 0.25% 0.00%
% Winners 49% 57% 52% 51% 59% 57%
MDD 4/29/1932 7.02% -- 4/29/1936 6.82% -- 4/29/1931 6.02%


Conclusion

The shortage of new highs tells us this is not a strong market. The shortage of new lows tells us there is little to worry about.

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

Last week the OTC was down slightly while all of the other major indices were up slightly so I am calling last weeks positive forecast a tie. This is the first time this year the indices have been split. The latest I can remember.

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Good Luck,

YTD W 8 / L 7 / T 1

 


 

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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