• 3 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 3 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 5 days Why 12 Million American Millionaires Isn’t Good News
  • 6 days Big Oil Is Paying The Price For Investing In Renewables
  • 7 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 8 days Did Amazon Just Democratize Prescription Drugs?
  • 9 days The Private Space Race Just Got Very Real
  • 11 days Short Sellers Are Willing Big In This Turbulent Market
  • 12 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 13 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 14 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 15 days Black Friday Could Be Retailers’ Only Hope
  • 16 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
  • 17 days The Real Reason Why Uber And Lyft Stocks Have Soared Nearly 50%
  • 19 days Bitcoin Heads Towards $16,000 And No One’s Cashing In
  • 20 days Elon Musk’s $250 Tesla Tequila Is Already Sold Out
  • 21 days Will The San Francisco Wealth Tax Spark An Exodus Of The Rich?
  • 22 days The Fin-Tech IPO Of The Century Just Got Crushed
  • 23 days UK Bookies Report Largest-Ever Political Bet Ahead Of Election Results
  • 24 days Better Safe Than Sorry: 5 Alternative Investment Plays
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Technical Market Report

The good news is:
 • The number of new lows remains insignificant.
 • The secondaries have held up well relative to the blue chips.

Last week new lows peaked on Monday at 25 on the NYSE and 38 on the NASDAQ on Friday there were 17 on the NYSE and 11 on the NASDAQ. The rule of thumb is 3 consecutive days of more than 40 new lows on the NYSE indicates trouble. So this indicator offers no reason for alarm.

The chart below shows the Russell 2000 (R2K) in red and the S&P 500 (SPX) in green, the indicator in yellow at the bottom of the screen is a FastTrack relative strength indicator called Accutrack. The best time to be long is when the indicator is rising. During the recent decline the indicator has fallen slowly, but remained above the neutral line indicating the R2K has held up well relative to the SPX during this recent period of decline. The indicator turned upward the middle of last week, although encouraging, day to day readings of the indicator are unreliable.

Although my longer term outlook is positive, short term there is little evidence the current period of weakness has ended.

The chart below covers the past 1.5 years and shows an average of 162 junk bond funds in the FastTrack database (BD-Junk.fam) in red and the percentage of those funds that are above their 50 day EMA in blue. The percentage of junk bond funds above their 50 day EMA has remained extremely high over the past 1.5 years with three exceptions:

  1. The low of October 2002.
  2. The period of weakness July-August 2003.
  3. The current period.

It will be comforting to see that indicator turn upward.

If you are suspicious of timing equities with junk bonds. The chart below is similar showing an average of the 41 Fidelity select funds in red and the percentage of them above their 50 day EMA's in blue.

Summation indexes (SI) are calculated by summing the values of an oscillator, when the oscillator is above 0 the SI rises, when it is below 0 the SI falls. The charts below show SI's calculated from advancing - declining issues, new highs - new lows and upside - downside volume. In the first chart they are calculated from the component issues of the SPX, in the second chart they are calculated from the component issues of the R2K. New highs and new lows for these calculations have been calculated over the trailing 30 trading days rather than 52 weeks as reported by the exchanges.

I have mentioned before, when these indicators are all going in the same direction it is imprudent to bet against them and as of Friday they are all heading downward. Although both the volume and AD oscillators are near 0 and rising.

End of month - beginning of month seasonality doesn't help much next week. Over the past 15 years both the R2K and SPX have averaged losses over period.

Last 3 days of March and first 2 days of April.
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.

R2K Day3 Day2 Day1 Day1 Day2 Totals
1989-1 0.15% 3 -0.03% 4 0.73% 5 0.25% 1 -0.20% 2 0.89%
1990-2 -0.16% 3 -0.24% 4 0.14% 5 -0.79% 1 0.65% 2 -0.41%
1991-3 1.15% 2 0.70% 3 0.70% 4 -0.41% 1 1.35% 2 3.49%
1992-4 -1.16% 5 -0.44% 1 0.37% 2 -0.65% 3 -0.93% 4 -2.81%
1993-1 0.08% 1 0.24% 2 0.67% 3 -0.24% 4 -1.71% 5 -0.96%
1994-2 -2.08% 2 -1.79% 3 -0.55% 4 -1.60% 1 2.80% 2 -3.22%
1995-3 -0.14% 3 0.15% 4 0.19% 5 0.02% 1 -0.02% 2 0.18%
1996-4 0.24% 3 0.10% 4 0.59% 5 0.50% 1 0.24% 2 1.67%
1997-1 0.46% 3 -0.95% 4 -1.83% 1 -0.49% 2 -0.91% 3 -3.72%
1998-2 -0.14% 5 -0.19% 1 0.94% 2 0.88% 3 0.31% 4 1.80%
1999-3 1.48% 1 -0.25% 2 -0.29% 3 0.28% 4 0.89% 1 2.12%
2000-4 -2.87% 3 -2.10% 4 1.41% 5 -4.28% 1 -1.92% 2 -9.76%
2001-1 -2.36% 3 -0.15% 4 2.04% 5 -2.39% 1 -2.91% 2 -5.77%
2002-2 1.06% 2 0.84% 3 0.12% 4 -0.39% 1 -0.79% 2 0.84%
2003-3 0.36% 4 -0.22% 5 -1.12% 1 1.14% 2 2.06% 3 2.22%
Averages -0.26% -0.29% 0.27% -0.54% -0.07% -0.90%
% Winners 53% 33% 73% 40% 47%  
 
SPX Day3 Day2 Day1 Day1 Day2 Totals
1989-1 0.26% 3 0.06% 4 0.80% 5 0.52% 1 -0.36% 2 1.27%
1990-2 0.15% 3 -0.35% 4 -0.25% 5 -0.36% 1 1.46% 2 0.64%
1991-3 1.75% 2 -0.25% 3 -0.03% 4 -1.04% 1 2.21% 2 2.63%
1992-4 -1.07% 5 -0.12% 1 0.17% 2 0.13% 3 -0.92% 4 -1.81%
1993-1 0.67% 1 0.27% 2 -0.07% 3 -0.30% 4 -1.98% 5 -1.41%
1994-2 -1.63% 2 -1.53% 3 0.05% 4 -1.54% 1 2.13% 2 -2.52%
1995-3 -0.15% 3 -0.18% 4 -0.30% 5 0.23% 1 0.68% 2 0.27%
1996-4 -0.62% 3 0.00% 4 -0.53% 5 1.27% 1 0.23% 2 0.36%
1997-1 0.18% 3 -2.10% 4 -2.17% 1 0.33% 2 -1.25% 3 -5.01%
1998-2 -0.49% 5 -0.17% 1 0.75% 2 0.58% 3 1.07% 4 1.74%
1999-3 2.13% 1 -0.72% 2 -1.11% 3 0.57% 4 2.12% 1 3.00%
2000-4 0.05% 3 -1.37% 4 0.72% 5 0.49% 1 -0.75% 2 -0.85%
2001-1 -2.44% 3 -0.46% 4 1.08% 5 -1.25% 1 -3.44% 2 -6.51%
2002-2 0.58% 2 0.53% 3 0.25% 4 -0.07% 1 -0.85% 2 0.44%
2003-3 -0.16% 4 -0.58% 5 -1.77% 1 1.21% 2 2.61% 3 1.31%
Averages -0.05% -0.47% -0.16% 0.05% 0.20% -0.43%
% Winners 53% 27% 47% 60% 53%  

You have to look pretty hard to find evidence that the recent decline has ended, on the bright side there is every reason to believe the current weakness is nothing more than a necessary interruption of the bull market that began in March 2003.

I expect the major indices will be lower on Friday April 2 than they were on Friday March 26.

Last week the R2K was up slightly while the SPX was down slightly so I am calling last weeks forecast a tie.

Back to homepage

Leave a comment

Leave a comment