Technical Market Report for October 8, 2016

By: Mike Burk | Sat, Oct 8, 2016
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The good news is:
• New lows have remained at benign levels.


The Negatives

The market had a pretty boring week.

All of the major indices were down slightly along with the breadth indicators.

The first chart 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.

This chart again is essentially unchanged from last week. Both the SPX and NY NH are nearly unchanged from last week.

SPX and NY NH Chart

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

Over the past week, there was not much change, everything was down slightly.

OTC and OTC NH Chart


The positives

Not much happened again last week. New highs continued to outnumber new lows by comfortable margins.

The next chart 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 a little, but finished the week at a comfortable 67%.

OTC and OTC HL Ratio Chart

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

NY HL Ratio finished the week down slightly, but, comfortably in positive territory.

SPX and NY HL Ratio Chart


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of October 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 1953 to 2015. There are summaries for both the 4th 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 modestly positive, over all years, but negative during the 4th year of the Presidential Cycle. Fourth year results were impacted significantly by 2008.

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

OTC Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1964-4 0.07% 0.19% 0.30% 0.35% 1.04% 1.94%
1968-4 -0.12% -0.53% 0.00% 0.42% -0.35% -0.58%
1972-4 0.30% 0.40% -0.35% -0.54% -0.53% -0.73%
 
1976-4 0.02% -0.78% -0.80% 0.67% -0.28% -1.17%
1980-4 1.33% 0.08% 0.51% 0.18% 0.13% 2.24%
1984-4 -0.37% -0.20% -0.32% 0.59% 0.56% 0.27%
1988-4 -0.05% -0.05% -0.71% 0.24% 0.29% -0.28%
1992-4 -1.12% 0.94% -0.24% 0.82% -0.59% -0.18%
Avg -0.04% 0.00% -0.31% 0.50% 0.03% 0.18%
 
1996-4 0.26% -0.86% -0.18% -0.08% 0.91% 0.06%
2000-4 -0.16% -3.43% -2.22% -2.96% 7.87% -0.90%
2004-4 0.53% 0.16% 0.79% -1.14% -1.47% -1.13%
2008-4 -4.34% -5.80% -0.83% -5.47% 0.27% -16.17%
2012-4 -0.76% -1.52% -0.43% -0.08% -0.17% -2.96%
Avg -0.89% -2.29% -0.57% -1.95% 1.48% -4.22%
 
OTC summary for Presidential Year 4 1964 - 2012
Avg -0.34% -0.88% -0.37% -0.54% 0.59% -1.51%
Win% 46% 38% 25% 54% 54% 31%
 
OTC summary for all years 1963 - 2015
Avg -0.03% -0.36% -0.05% 0.21% 0.50% 0.27%
Win% 58% 45% 50% 70% 70% 57%
 
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 -0.04% -0.50% 1.39% -0.06% 0.41% 1.19%
1960-4 0.20% 0.15% -0.13% 0.78% 0.53% 1.53%
1964-4 0.45% 0.06% 0.01% 0.28% 0.21% 1.02%
1968-4 -0.01% 0.04% 0.00% -0.43% -0.11% -0.51%
1972-4 0.26% 0.08% -0.45% -0.82% -0.63% -1.56%
Avg 0.17% -0.03% 0.21% -0.05% 0.08% 0.33%
 
1976-4 -0.13% -0.77% -0.25% 0.55% -0.95% -1.55%
1980-4 1.86% -0.55% 0.50% -0.46% -0.57% 0.76%
1984-4 -0.34% -0.28% 0.27% 0.41% 0.86% 0.92%
1988-4 0.06% -0.11% -1.42% 0.45% 0.10% -0.92%
1992-4 -0.71% -0.10% -0.72% 0.87% -1.25% -1.90%
Avg 0.15% -0.36% -0.32% 0.36% -0.36% -0.54%
 
1996-4 0.27% -0.39% -0.56% -0.31% 0.87% -0.11%
2000-4 -0.49% -1.07% -1.62% -2.55% 3.34% -2.39%
2004-4 0.32% -0.06% 0.67% -1.00% -0.75% -0.82%
2008-4 -3.85% -5.74% -1.13% -7.62% -1.18% -19.52%
2012-4 -0.35% -0.99% -0.62% 0.02% -0.30% -2.23%
Avg -0.82% -1.65% -0.65% -2.29% 0.40% -5.01%
 
SPX summary for Presidential Year 4 1956 - 2012
Avg -0.17% -0.68% -0.29% -0.66% 0.04% -1.74%
Win% 47% 27% 36% 47% 47% 33%
 
SPX summary for all years 1953 - 2015
Avg 0.11% -0.27% 0.14% -0.08% 0.16% 0.07%
Win% 55% 35% 48% 44% 56% 57%


Conclusion

Not much happened again last week. The major indices moved slightly downward along with the breadth indicators. Seasonality for next week has been weak.

I expect the major averages to be lower on Friday October 14 than they were on Friday October 7.

Last weeks positive forecast was a miss.

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

Good Luck,

YTD W 15 / L 17 / T 8

 


 

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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