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Technical Market Report for April 15, 2017

By: Mike Burk | Saturday, April 15, 2017

The good news is:
• The market is oversold and ready for a bounce.


The Negatives

New highs continued to deteriorate, new lows increased a little and the secondaries continue to under perform the blue chips.

The first chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.

OTC NH continued its decline.

OTC and OTC NH

The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated with NYSE data.

The pattern is similar to the chart above.

SPX and NY NH


The Positives

New lows increased last week, but remain at non threatening levels.

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 rose a little last week and held above the neutral line.

OTC and OTC HL Ratio

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

NY HL Ratio fell a bit last week, but finished the week down a little at a very strong 78%.

SPX and NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of April during the 1st 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 2016 while SPX data runs from 1953 to 2016. There are summaries for both the 1st 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 and a little weaker during the 1st year of the Presidential Cycle than average.

Report for the week before the 3rd Friday of April.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 0.30% 0.16% 0.12% -0.06% 0.28% 0.79%
1969-1 0.55% -0.89% 0.08% 0.50% -0.19% 0.06%
1973-1 -0.99% -1.58% -1.67% 0.32% -1.20% -5.13%
 
1977-1 -0.09% -0.07% 0.27% -0.56% -0.73% -1.19%
1981-1 0.42% -0.38% 0.35% 0.24% 0.71% 1.34%
1985-1 -0.35% 0.00% 0.44% 0.32% 0.06% 0.47%
1989-1 0.02% 0.71% 0.28% -0.09% 0.53% 1.45%
1993-1 -0.56% -0.16% 0.31% -0.08% -0.77% -1.26%
Avg -0.11% 0.02% 0.33% -0.03% -0.04% 0.16%
 
1997-1 0.79% -0.29% -0.21% 0.56% 0.45% 1.30%
2001-1 -4.81% -2.07% 2.14% -1.21% 2.01% -3.95%
2005-1 -0.36% 0.67% -1.55% -1.40% -1.98% -4.62%
2009-1 -3.88% 2.22% 0.14% 0.37% 2.55% 1.39%
2013-1 -2.38% 1.50% -1.84% -1.20% 1.25% -2.66%
Avg -2.13% 0.40% -0.26% -0.57% 0.86% -1.71%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg -0.87% -0.02% -0.09% -0.18% 0.23% -0.92%
Win% 38% 42% 69% 46% 62% 54%
 
OTC summary for all years 1963 - 2016
Avg -0.39% 0.32% 0.27% 0.25% 0.15% 0.61%
Win% 45% 58% 70% 63% 63% 69%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 0.45% -0.24% -0.85% -1.10% 0.04% -1.71%
 
1957-1 0.15% 0.37% 0.15% -0.35% -0.13% 0.20%
1961-1 0.47% -0.72% -0.59% 0.02% -0.08% -0.90%
1965-1 0.41% -0.06% -0.18% 0.54% 0.11% 0.83%
1969-1 -0.67% 0.22% 0.02% 0.47% 0.44% 0.48%
1973-1 -0.53% -1.42% -1.50% 0.51% -1.52% -4.47%
Avg -0.04% -0.32% -0.42% 0.24% -0.24% -0.77%
 
1977-1 -0.49% -0.47% 0.33% -0.65% -1.31% -2.59%
1981-1 0.56% -0.90% -0.07% -0.15% 0.90% 0.34%
1985-1 -0.23% 0.65% 0.21% 0.64% -0.68% 0.60%
1989-1 0.12% 1.43% 0.37% -0.31% 1.12% 2.72%
1993-1 -0.33% -0.53% -0.33% -0.94% -0.55% -2.68%
Avg -0.07% 0.04% 0.10% -0.28% -0.11% -0.32%
 
1997-1 0.82% 1.48% 1.17% -0.23% 0.60% 3.84%
2001-1 -1.50% -1.22% 1.59% 0.47% 1.50% 0.85%
2005-1 0.00% 0.55% -1.18% -1.00% -1.67% -3.29%
2009-1 -4.28% 2.13% -0.77% 0.99% 1.68% -0.25%
2013-1 -2.30% 1.43% -1.43% -0.67% 0.88% -2.08%
Avg -1.45% 0.87% -0.12% -0.09% 0.60% -0.19%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg -0.46% 0.17% -0.19% -0.11% 0.08% -0.51%
Win% 50% 50% 44% 44% 56% 50%
 
SPX summary for all years 1953 - 2016
Avg -0.15% 0.31% 0.09% 0.11% -0.03% 0.33%
Win% 47% 55% 59% 64% 50% 66%


Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms. M2 growth took a dive last month.

S&p500 and M2 Money Supply

Interest rates did not move much in the past month.

S&P500 and Yield Curve


Conclusion

The breadth indicators continued to deteriorate, but, except for Thursday on the NASDAQ new highs have been outnumbering new lows. The market is a bit oversold right now so it could break either way.

I expect the major averages to be higher on Thursday April 21 than they were on Thursday April 13.

Last weeks positive forecast was a miss.

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

Good Luck,

YTD W 4 / L 7 / T 4

 

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