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Technical Market Report

The good news is:
 •  All of the intermediate term indicators are still movingsharply upward.
 •  It is difficult to find a raging bull.

Nothing has changed since last week, the market is still overbought and there is still no volume to get excited about.

The NASDAQ new high indicator is a 10% trend (19 day EMA) of NASDAQ new highs. The current value of the indicator is 57 so less than 57 daily new highs on the NASDAQ would turn the indicator downward. The lowest number reported last week was 69 on Tuesday, the only down day of the week. The long side is a good bet when this indicator is moving upward as it is now.

Summation indices (SI) are running totals of oscillator values. When the oscillator is positive the SI moves upward when the oscillator is negative the SI moves downward. The chart below shows SI's derived from oscillators of NASDAQ advances & declines, new highs & new lows and upside & downside volume. All of the SI's are moving sharply upward. When the SI's are all moving the same direction, it is imprudent to bet against them.

The small caps usually lead both up and down. The chart below shows the Russell 2000 (R2K) in red, the S&P 500 (SPX) in green and Accutrack (a FastTrack relative strength indicator) as a histogram in yellow. Accutrack indicates the R2K continues to outperform the SPX as it has since the bottom a month ago.

The missing ingredient of this rally is volume. The chart below shows the NASDAQ composite in red and a 5% trend (39 day EMA) of total NASDAQ volume in blue. Volume turned up slightly in the past week, but has been falling irregularly since late January. Total volume implies interest and it would be nice to see a little in support of this rally.

Seasonally (defining next week as the week prior to options expiration) next week has a slightly positive bias that favors the blue chips.

Witching summary report for September
Witching is futures and options expiration the 3rd Friday of the month.
The witching Friday is marked *Fri*.
The number following the year is the position in the presidential cycle.
Daily returns

R2K
Year Mon Tue Wed Thur *Fri*
1988-4 0.01% 0.09% 0.31% -0.06% 0.20%
1989-1 -0.49% 0.33% -0.03% -0.70% -0.50%
1990-2 -0.30% -0.41% -0.09% -1.51% -0.72%
1991-3 -0.18% -0.10% 0.37% 0.75% 0.62%
1992-4 1.00% -0.78% -0.23% 0.16% 0.26%
1993-1 -0.05% -0.81% 0.36% 0.15% 0.11%
1994-2 -0.35% 0.43% 0.23% 0.87% 0.00%
1995-3 0.15% 0.21% 0.13% 0.05% -0.58%
1996-4 0.44% -0.01% -0.20% -0.07% 0.44%
1997-1 0.02% 1.14% 0.22% 0.08% 0.15%
1998-2 1.16% 0.00% 0.59% -1.27% 2.24%
1999-3 -0.35% -0.32% -0.44% -1.39% 0.98%
2000-4 -0.39% -0.22% 0.29% 0.98% -1.54%
2001-1 3.93% 0.61% -1.61% 0.81% 3.03%
2002-2 -0.99% -1.77% -0.67% -2.98% 0.48%
2003-3 -0.28% 1.58% -0.11% 0.85% 0.14%
Avg 0.21% 0.00% -0.06% -0.21% 0.33%
Win% 44% 50% 50% 56% 75%
 
SPX
Year Mon Tue Wed Thur *Fri*
1988-4 -0.14% 0.36% 0.70% -0.44% 0.94%
1989-1 -0.32% 0.30% -0.93% -0.67% 0.55%
1990-2 0.30% 0.26% -0.63% -1.62% -0.05%
1991-3 0.57% -0.07% 0.37% 0.16% 0.09%
1992-4 1.36% -1.29% 0.04% 0.00% 0.71%
1993-1 0.07% -0.47% 0.37% -0.47% -0.13%
1994-2 -0.42% 0.28% 0.27% 1.28% -0.76%
1995-3 0.21% 0.45% 0.39% 0.84% -0.04%
1996-4 0.51% -0.15% -0.22% 0.22% 0.59%
1997-1 -0.45% 2.81% -0.28% 0.45% 0.34%
1998-2 2.05% 0.77% 0.75% -2.55% 0.12%
1999-3 -0.56% -0.58% -1.37% 0.04% 1.28%
2000-4 -0.35% -0.49% 0.20% -0.27% -1.02%
2001-1 3.90% 0.88% -0.52% 1.15% 2.19%
2002-2 0.14% -1.97% -0.46% -3.01% 0.25%
2003-3 -0.38% 1.43% -0.33% 1.33% -0.32%
Avg 0.41% 0.16% -0.10% -0.22% 0.30%
Win% 56% 56% 50% 56% 63%

There is no evidence of a market turning point.

I expect the major indices to be higher on Friday September 17 than they were on Friday September 10.

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