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Technical Market Report

The good news is:
 • The number of new lows on the NASDAQ remains insignificant.
 • Many of the short term indicators have turned upward.
 • Next week is seasonally strong.

Increasing volume is generally good and the chart below shows, since the late March low, volume of the component issues of the Russell 2000 (R2K) has been increasing.

The next chart offers a shorter term view of the volume components of the R2K. The indicator on this chart is constructed by subtracting momentum of volume of issues declining in price from momentum of issues advancing in price.

On the R2K, the volume indicators are moving in the right direction.

The same indicator can be derived from new highs and new lows. In the chart below, the indicator (in blue) is constructed by subtracting momentum of new lows subtracted from momentum of new highs. New highs and new lows for this chart have been calculated from the component issues of the R2K on a trailing 6 week basis rather than 52 weeks as reported by the exchanges.

The next two charts show two indicators calculated from new highs and new lows on the S&P500 (SPX). The first is an oscillator constructed by subtracting a longer moving average from a shorter moving average of new lows subtracted from new highs. For this indicator new highs and new lows have been calculated on the component issues of the SPX over the past 6 weeks.

The oscillator above jumps around a lot, but generally when it is above the zero line the market is moving upward.

A summation index (SI) is calculated by adding the values of an oscillator. When the oscillator is above zero the SI moves upward and when the oscillator is below zero the SI moves downward.

The chart below shows a SI of the oscillator in the chart above.

Seasonality, as developed by Norman Fosback says that most of the markets gains can be captured in the first and last few trading days of each month. Some months are better than others. The tables below show how the R2K and SPX have fared over the last 5 trading days of April during the past 15 years.

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

R2K Day5 Day4 Day3 Day2 Day1 Totals
1989-1 -0.01% 1 -0.01% 2 0.20% 3 0.42% 4 0.24% 5 0.84%
1990-2 -0.08% 2 1.02% 3 -0.78% 4 -0.57% 5 0.17% 1 -0.24%
1991-3 0.55% 3 -0.23% 4 -0.44% 5 -1.02% 1 -0.82% 2 -1.97%
1992-4 -0.08% 5 -0.71% 1 -0.81% 2 1.02% 3 1.39% 4 0.81%
1993-1 -1.44% 1 0.02% 2 0.41% 3 0.41% 4 0.61% 5 0.01%
1994-2 0.50% 5 1.12% 1 0.65% 2 0.14% 4 0.49% 5 2.92%
1995-3 0.45% 1 0.10% 2 0.35% 3 0.31% 4 0.18% 5 1.39%
1996-4 0.33% 3 0.46% 4 0.46% 5 0.11% 1 0.02% 2 1.38%
1997-1 0.04% 4 -0.79% 5 0.07% 1 1.33% 2 0.71% 3 1.36%
1998-2 -0.95% 5 -2.46% 1 0.86% 2 0.94% 3 1.24% 4 -0.37%
1999-3 0.75% 1 0.04% 2 -0.37% 3 -0.16% 4 -0.01% 5 0.25%
2000-4 -2.76% 1 4.37% 2 -0.98% 3 2.13% 4 2.36% 5 5.13%
2001-1 0.28% 2 2.25% 3 1.02% 4 1.34% 5 0.28% 1 5.17%
2002-2 -0.58% 3 0.30% 4 -1.44% 5 -0.19% 1 2.02% 2 0.11%
2003-3 -0.68% 4 -0.96% 5 1.72% 1 0.15% 2 0.73% 3 0.96%
Averages -0.25% 0.30% 0.06% 0.42% 0.64% 1.18%
Winners 47% 60% 60% 73% 87%  
 
SPX Day5 Day4 Day3 Day2 Day1 Totals
1989-1 -0.30% 1 -0.63% 2 0.06% 3 0.86% 4 0.02% 5 0.02%
1990-2 -0.21% 2 0.51% 3 0.27% 4 -1.14% 5 0.51% 1 -0.07%
1991-3 0.26% 3 -0.92% 4 -0.06% 5 -1.41% 1 0.45% 2 -1.68%
1992-4 -0.63% 5 -0.14% 1 0.16% 2 0.71% 3 0.71% 4 0.82%
1993-1 -0.80% 1 1.03% 2 0.00% 3 0.20% 4 0.30% 5 0.73%
1994-2 -0.25% 5 1.13% 1 -0.19% 2 -0.61% 4 0.40% 5 0.49%
1995-3 0.87% 1 -0.15% 2 0.11% 3 0.17% 4 0.23% 5 1.22%
1996-4 -0.22% 3 0.42% 4 0.09% 5 0.11% 1 0.00% 2 0.40%
1997-1 -0.32% 4 -0.75% 5 0.99% 1 2.73% 2 0.92% 3 3.57%
1998-2 -1.04% 5 -1.93% 1 -0.13% 2 0.88% 3 1.56% 4 -0.66%
1999-3 0.24% 1 0.20% 2 -0.87% 3 -0.60% 4 -0.57% 5 -1.60%
2000-4 -0.33% 1 3.33% 2 -1.11% 3 0.27% 4 -0.85% 5 1.30%
2001-1 -1.22% 2 1.59% 3 0.47% 4 1.50% 5 -0.29% 1 2.06%
2002-2 -0.71% 3 -0.15% 4 -1.39% 5 -1.01% 1 1.08% 2 -2.18%
2003-3 -0.83% 4 -1.38% 5 1.78% 1 0.33% 2 -0.10% 3 -0.20%
Averages -0.36% 0.14% 0.01% 0.20% 0.29% 0.28%
Winners 20% 47% 60% 67% 73%  

Small caps typically outperform large caps during the beginning of month, end of month periods.

The market is entering a seasonally strong period as it is coming off a short term low, this is a good combination.

I expect the major indices will be higher on Friday April 30 than they were on Friday April 23.

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