• 5 hours Is A Global Currency Necessary?
  • 21 hours America Has Shed 500,000 Millionaires Since The Coronavirus Lockdown Began
  • 1 day Trump Wants Another $2 Trillion Economic Intervention
  • 2 days The Surprising Businesses Deemed “Essential” During The Coronavirus Lockdown
  • 2 days Priceless Van Gogh "Spring Garden" Painting Stolen
  • 2 days Oil Falls To $20 For First Time In Nearly Two Decades
  • 2 days COVID-19 Could Be The End Of U.S. Coal
  • 3 days How Much Does Your Social Security Number Cost? $4 On The Dark Web
  • 4 days Silver Stocks Have Been Decimated In The Coronavirus Sell-Off
  • 5 days How Blockchain Tech Could Make Mergers And Acquisitions More Efficient
  • 5 days America’s Shortage Of This Metal Keeps Trump Up At Night
  • 6 days Bidet Bonanza: Defying The Toilet Paper Shortage
  • 6 days U.S. Auto Sales Fall By 75%
  • 7 days Violating Quarantine? Big Brother Is Watching
  • 7 days Does Gold Still Have Some Room To Run?
  • 7 days Major Acquisition Gives The World’s First Green Ride-Share Another Edge
  • 8 days U.S. Pushes For Digital Currency For Immediate Stimulus
  • 8 days The Impossible Challenges Created By Growing Population
  • 8 days Gold Skyrockets After Fed Pledges "Unlimited" Cash To Boost Economy
  • 9 days World’s Richest Lose $1 Trillion In Stock Market Rout
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:
 • New lows have dried up on both exchanges.
 • The secondaries are outperforming the blue chips.

As of last weekend the NASDAQ new low indicator was at a new low, i.e. near a high in the number of new lows and had not turned upward. NASDAQ new lows peaked at 182 on Monday May 10 and remained uncomfortably high until this past week. The chart below shows the NASDAQ composite in red and the new low indicator (A 19 day EMA on an inverted Y axis) in blue. Since last Monday, the indicator has been moving up sharply implying risk is limited at this time.

Overbought is a nebulous concept suggesting the market has gone up too far too fast. Calling the market overbought is like calling the price of gas it too high.

By most overbought/oversold measures such as the % an index is above its moving average (50 and 200 day moving averages are popular), price oscillators and momentum indicators, the current market is about neutral. Some shorter term measures suggest there is not much room to the upside in the near term. The first chart below shows the S&P mid cap index in red and an indicator that plots the percentage of the past 7 trading days the index has been up. The chart covers the past 1.5 years. The indicator reaches the top of the screen when the index has been up for 7 consecutive trading days; that has only happened twice since this rally began. The first time was leading up to the Labor Day holiday last September after which the market fell modestly before resuming its upward move. The other time was April 5 this year when the index made a new high before falling nearly 9% over the next 6 weeks to the recent low. I think there are stronger parallels between the current period and last September because the weakness we saw last July and early August was, at that point, the most severe to that date. The weakness we saw going into the low of a week ago is now the most severe to date.

The chart below shows the Russell 2000 (R2K) in red and an indicator that attempts to force the price action into cyclical pattern in blue. With a major exception that occurred around the first of this year, the index has started to decline shortly after the indicator reached the top of the screen where it is now.

Seasonally the first three days of June have been pretty strong.

First 4 days of June.
The number following the year is its position in the presidential cycle.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.

R2K Day1 Day2 Day3 Day4 Totals
1989-1 0.51% 4 0.58% 5 -0.59% 1 -0.12% 2 0.38%
1990-2 0.47% 5 0.54% 1 -0.23% 2 -0.19% 3 0.59%
1991-3 0.10% 1 0.01% 2 -0.02% 3 -0.07% 4 0.03%
1992-4 0.43% 1 0.28% 2 0.02% 3 -0.08% 4 0.65%
1993-1 0.39% 2 0.34% 3 0.19% 4 -0.40% 5 0.52%
1994-2 0.32% 3 0.76% 4 0.04% 5 0.25% 1 1.38%
1995-3 0.46% 4 0.29% 5 0.72% 1 0.17% 2 1.63%
1996-4 -0.11% 1 0.34% 2 0.26% 3 -0.66% 4 -0.18%
1997-1 0.72% 1 -0.06% 2 -0.16% 3 0.61% 4 1.11%
1998-2 -1.19% 1 -0.33% 2 -0.12% 3 0.57% 4 -1.07%
1999-3 -0.28% 2 -0.16% 3 -0.17% 4 1.46% 5 0.84%
2000-4 3.42% 4 4.17% 5 0.05% 1 -0.32% 2 7.33%
2001-1 1.05% 5 1.12% 1 1.81% 2 -0.76% 3 3.22%
2002-2 -2.68% 1 -0.13% 2 0.27% 3 -2.05% 4 -4.60%
2003-3 0.37% 1 0.28% 2 1.66% 3 1.21% 4 3.52%
Averages 0.26% 0.54% 0.25% -0.02% 1.02%
% Winners 73% 73% 60% 40%  
 
SPX Day1 Day2 Day3 Day4 Totals
1989-1 0.45% 4 1.10% 5 -1.07% 1 0.69% 2 1.17%
1990-2 0.53% 5 1.17% 1 -0.21% 2 -0.46% 3 1.04%
1991-3 -0.45% 1 -0.08% 2 -0.68% 3 -0.38% 4 -1.60%
1992-4 0.47% 1 -0.91% 2 0.26% 3 -0.32% 4 -0.50%
1993-1 0.81% 2 0.00% 3 -0.30% 4 -0.54% 5 -0.02%
1994-2 0.25% 3 0.00% 4 0.54% 5 -0.27% 1 0.52%
1995-3 0.02% 4 -0.18% 5 0.58% 1 -0.01% 2 0.40%
1996-4 -0.22% 1 0.73% 2 0.87% 3 -0.80% 4 0.59%
1997-1 -0.23% 1 -0.10% 2 -0.64% 3 0.40% 4 -0.57%
1998-2 0.01% 1 0.21% 2 -0.96% 3 1.12% 4 0.38%
1999-3 -0.58% 2 0.04% 3 0.37% 4 2.17% 5 2.00%
2000-4 1.99% 4 1.96% 5 -0.65% 1 -0.67% 2 2.63%
2001-1 0.39% 5 0.51% 1 1.30% 2 -1.05% 3 1.14%
2002-2 -2.48% 1 0.00% 2 0.88% 3 -1.98% 4 -3.57%
2003-3 0.35% 1 0.47% 2 1.51% 3 0.40% 4 2.73%
Averages 0.09% 0.33% 0.12% -0.11% 0.42%
% Winners 67% 73% 53% 33%  

The market is overbought for the short term, but should get some help from a seasonally strong bias during the first part of the week.

I expect the major indices will be higher on Friday June 4 than they were on Friday May 28.

Back to homepage

Leave a comment

Leave a comment