"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 6 mins Market Sentiment Slips Ahead Of Tech Earning Reports
  • 16 hours The Trillion Dollar Space Race
  • 2 days The FANG Stock Investors Should Avoid
  • 3 days Is This The Death Of The iPhone X?
  • 3 days Is London Still The Financial Capital Of The World?
  • 3 days Is Gold Staging A Comeback?
  • 3 days The $200 Million ‘Golden Parachute’ For Rupert Murdoch
  • 3 days Bitcoin’s Breakout Is Not As Bullish As it Seems
  • 3 days Farmers On Edge As Trade War Hits U.S. Grain Shipments
  • 3 days Is Silver Poised For A Massive Break Out?
  • 4 days Meet The Hedge Fund Billionaires Club
  • 4 days The Next Housing Crisis Could Be Right Around The Corner
  • 4 days Cartel's, Pirates And Corruption Cost Mexico $1.6 Billion Per Year
  • 4 days Africa’s Fastest Growing Economy
  • 4 days The Blockchain Boom Hits The Utilities Sector
  • 4 days Why Smart Money Is Selling Off Right Before The Bell
  • 4 days Tech Giants Rally Ahead Of Earnings Reports
  • 5 days Global Debt Hits 225% Of GDP
  • 5 days The World’s First Trillionaire Will Be A Space Miner
  • 5 days How Student Debt Could Cause The Next Real Estate Crisis
Investors Bullish As Earnings Season Kicks Off

Investors Bullish As Earnings Season Kicks Off

The first round of earnings…

The FANG Stock Investors Should Avoid

The FANG Stock Investors Should Avoid

Thanks to a private data…

Is This The Death Of The iPhone X?

Is This The Death Of The iPhone X?

Apple’s stock has slipped more…

Technical Market Report

The good news is:
 • Next week has a mildly positive seasonal bias.
 • The number of new lows remains insignificant.

It is difficult to time a market that goes straight up and that is what we have seen for the past 11 months. During straight up markets, indicators that normally signal down periods only signal a slowing of the advance at best. As long as the number of new lows remains insignificant, it is unlikely there will be a serious decline in spite of what the other indicators are saying.

With a few exceptions including Retail, Energy (not energy services) and Forest products most sector and broad market indicators are heading downward. Last week I showed several charts of Summation indexes (SI) which are calculated by adding oscillator values to a running total. When the oscillator is above 0 the SI rises, when it is below 0 it falls. SI's can be calculated on advances and declines (AD), new highs and new lows (HL) and upside and downside volume (UD). The indexes can be calculated from broad market data as well as sectors. Direction, not level, of the Si's is most important. When direction of the SI's are in agreement, it is imprudent to bet against them.

Last week all of most of the summation indexes continued the downward move that began late the week before.

The chart below all shows the NASDAQ composite and three summation indexes and indexes calculated from total NASDAQ data.

The next chart shows the Russell 2000 along with indexes calculated from the component issues of the Russell 2000. New highs and new lows for the HL SI were calculated on a trailing 6 week basis rather than 52 weeks as reported by the exchanges.

Some analysts use an index of the Fidelity Select funds as a well managed market index. Volume data is not available for mutual funds, but SI's can be calculated from advances and declines and new highs and new lows. The chart below shows an average of the Fidelity select funds along with an AD SI and an HL SI. New highs and new lows for the HL SI were calculated on a trailing 6 week basis rather than 52 weeks as reported by the exchanges.

Not everything is negative. Forest products, shown in the chart below, appears strong.

Last week I showed performance tables of the week before and the week after options expiration in February. The Monday after options expiration in February has been one of the weakest of that 10 (trading) day period.

Next week includes the last 5 trading days of February. For the past 15 years there has been a slight upward bias during this period as you can see in the tables below. Typically seasonally strong periods favor small caps.

Last 5 days of February.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.

The number following the year represents its position in the presidential cycle.

Russell 2k Day5 Day4 Day3 Day2 Day1 Totals
1989-1 -0.88% 3 0.01% 4 -0.75% 5 -0.19% 1 0.39% 2 -1.41%
1990-2 0.48% 4 -0.74% 5 -0.19% 1 0.32% 2 0.56% 3 0.43%
1991-3 0.67% 5 0.65% 1 -0.83% 2 0.83% 3 0.99% 4 2.32%
1992-4 -0.72% 1 -0.63% 2 1.26% 3 0.39% 4 0.07% 5 0.37%
1993-1 -1.27% 1 -0.25% 2 0.95% 3 0.52% 4 0.75% 5 0.69%
1994-2 0.38% 2 -0.05% 3 -1.02% 4 0.30% 5 0.96% 1 0.57%
1995-3 0.03% 3 0.40% 4 0.20% 5 -0.63% 1 1.07% 2 1.07%
1996-4 0.19% 5 -0.14% 1 -0.14% 2 0.13% 3 -0.10% 4 -0.06%
1997-1 0.02% 1 0.09% 2 -0.80% 3 -0.74% 4 -0.30% 5 -1.73%
1998-2 0.51% 1 -0.44% 2 0.92% 3 0.67% 4 0.06% 5 1.72%
1999-3 1.41% 1 0.30% 2 -0.94% 3 -0.64% 4 -0.12% 5 0.01%
2000-4 1.66% 3 0.75% 4 0.49% 5 0.17% 1 3.59% 2 6.66%
2001-1 -1.29% 4 0.04% 5 2.27% 1 -1.96% 2 -0.91% 3 -1.85%
2002-2 1.45% 5 0.67% 1 0.66% 2 0.28% 3 -0.69% 4 2.37%
2003-3 -1.69% 1 0.83% 2 -0.89% 3 0.97% 4 -0.25% 5 -1.03%
Averages 0.06% 0.10% 0.08% 0.03% 0.40% 0.67%
Winners 67% 60% 47% 67% 60%  
 
S&P 500 Day5 Day4 Day3 Day2 Day1 Totals
1989-1 -1.71% 3 0.39% 4 -1.68% 5 0.24% 1 0.36% 2 -2.40%
1990-2 -0.60% 4 -0.48% 5 1.39% 1 0.48% 2 0.49% 3 1.29%
1991-3 0.19% 5 0.44% 1 -1.21% 2 1.36% 3 -0.18% 4 0.59%
1992-4 0.20% 1 -0.44% 2 1.19% 3 -0.36% 4 -0.28% 5 0.32%
1993-1 0.23% 1 -0.10% 2 1.40% 3 0.33% 4 0.24% 5 2.10%
1994-2 0.81% 2 -0.16% 3 -1.37% 4 0.39% 5 0.23% 1 -0.10%
1995-3 0.48% 3 0.38% 4 0.25% 5 -0.88% 1 0.74% 2 0.97%
1996-4 0.03% 5 -1.31% 1 -0.50% 2 -0.38% 3 -0.67% 4 -2.82%
1997-1 1.06% 1 0.22% 2 -0.79% 3 -1.32% 4 -0.53% 5 -1.36%
1998-2 0.38% 1 -0.73% 2 1.20% 3 0.55% 4 0.06% 5 1.46%
1999-3 2.66% 1 -0.08% 2 -1.40% 3 -0.67% 4 -0.54% 5 -0.02%
2000-4 0.63% 3 -0.53% 4 -1.48% 5 1.10% 1 1.36% 2 1.08%
2001-1 -0.20% 4 -0.56% 5 1.75% 1 -0.77% 2 -1.43% 3 -1.20%
2002-2 0.82% 5 1.80% 1 0.00% 2 0.05% 3 -0.28% 4 2.38%
2003-3 -1.84% 1 0.72% 2 -1.31% 3 1.18% 4 0.46% 5 -0.79%
Averages 0.21% -0.03% -0.17% 0.09% 0.00% 0.10%
Winners 73% 40% 40% 60% 53%  

There is no evidence that the recent soft patch has ended and the market is not oversold. So it is likely the recent weakness will last a few more days. Next week has a slightly positive seasonal bias and that should limit the decline.

I expect the major indices will be higher on Friday February 27 than they were on Friday February 20.

Back to homepage

Leave a comment

Leave a comment