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Technical Market Report for April 21, 2012

The good news is:
• New lows have retreated from threatening levels.


The negatives

Although prices have been rallying for the past week and a half new highs have not been increasing.

The chart below covers the past 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.

NY NH has been flat for the past week and a half.

The chart below is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH has been calculated from NASDAQ data.

OTC NH has continued to fall, although not as quickly as it had been falling.


The positives

The breadth numbers improved last week, but not with the vigor that sustains confidence.

The chart below covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of NASDAQ new highs divided by new highs + new lows (OTC HL Ratio) in red. Dashed horizontal lines have been drawn at 10% levels of the indicator; the line is solid at the neutral 50% level.

OTC HL Ratio improved a little last week and held on the positive side of neutral.

The chart below is similar to the one above except it shows the SPX in red and NY HL Ratio, in black, has been calculated from NYSE data.

NY HL Ratio was a little stronger than OTC HL Ratio last week for the first time in several weeks.


Seasonality

Next week includes the 5 trading days prior to the 4th Friday in April during the 4th year of the Presidential Cycle. Because Good Friday usually falls in April and the market is closed there have been very few 4th Fridays in April during which the market was open.

The tables below show the return on a percentage basis for the last 6 trading days in April during the 4th year of the Presidential Cycle.

OTC data covers the period from 1963 - 2011 and SPX data covers the period from 1928 - 2011. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

Average returns for the OTC over the coming week have been slightly positive while average returns for the SPX have been slightly negative.

Report for the last 6 days of April.
The number following the year represents its position in the Presidential Cycle.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.

OTC Presidential Year 4
  Day6 Day5 Day4 Day3 Day2 Day1 Totals
1964-4 0.00% 4 -0.20% 5 -1.17% 1 -0.03% 2 0.57% 3 -0.49% 4 -1.32%
1968-4 -0.17% 2 0.25% 3 0.95% 4 1.87% 5 0.30% 1 0.30% 2 3.51%
 
1972-4 0.11% 5 -0.83% 1 -0.80% 2 0.06% 3 0.07% 4 0.24% 5 -1.15%
1976-4 -0.40% 5 -0.03% 1 -0.65% 2 0.36% 3 0.28% 4 -0.52% 5 -0.97%
1980-4 0.89% 3 1.29% 4 -0.56% 5 0.45% 1 0.58% 2 0.46% 3 3.12%
1984-4 -0.64% 1 0.05% 2 -0.07% 3 0.83% 4 0.39% 5 0.22% 1 0.79%
1988-4 0.23% 5 0.33% 1 0.68% 2 0.22% 3 0.03% 4 0.12% 5 1.61%
Avg 0.04% 0.16% -0.28% 0.38% 0.27% 0.10% 0.68%
 
1992-4 -0.38% 4 -0.55% 5 -1.04% 1 -1.17% 2 1.72% 3 1.53% 4 0.12%
1996-4 1.15% 2 0.86% 3 0.63% 4 0.23% 5 0.11% 1 0.19% 2 3.17%
2000-4 -1.69% 4 -4.43% 1 6.57% 2 -2.19% 3 3.96% 4 2.30% 5 4.53%
2004-4 0.83% 5 -0.63% 1 -0.21% 2 -2.12% 3 -1.55% 4 -1.97% 5 -5.65%
2008-4 1.19% 3 0.99% 4 -0.25% 5 0.06% 1 0.07% 2 -0.55% 3 1.51%
Avg 0.22% -0.75% 1.14% -1.04% 0.86% 0.30% 0.74%
 
OTC summary for Presidential Year 4 1964 - 2008
Averages 0.09% -0.24% 0.34% -0.12% 0.54% 0.15% 0.77%
% Winners 50% 50% 33% 67% 92% 67% 67%
MDD 4/30/2004 6.32% -- 4/24/2000 6.04% -- 4/28/1992 3.10%
 
OTC summary for all years 1963 - 2011
Averages -0.12% -0.13% -0.03% -0.01% 0.19% 0.24% 0.14%
% Winners 57% 55% 47% 71% 65% 67% 53%
MDD 4/29/1970 9.16% -- 4/24/2001 6.79% -- 4/30/2004 6.32%
 
SPX Presidential Year 4
  Day6 Day5 Day4 Day3 Day2 Day1 Totals
1928-4 0.52% 2 0.42% 3 0.72% 4 1.08% 5 0.36% 6 0.00% 1 3.10%
 
1932-4 0.33% 1 1.49% 2 2.45% 3 -3.83% 4 -3.32% 5 0.00% 6 -2.87%
1936-4 0.28% 5 0.55% 6 -3.86% 1 -0.14% 2 -2.94% 3 1.77% 4 -4.34%
1940-4 -0.41% 3 0.08% 4 -0.90% 5 0.08% 6 0.25% 1 0.58% 2 -0.32%
1944-4 -1.02% 1 0.17% 2 0.60% 3 0.43% 4 0.51% 5 0.00% 6 0.69%
1948-4 -0.13% 6 -1.40% 1 0.06% 2 0.13% 3 -0.32% 4 -0.26% 5 -1.91%
Avg -0.19% 0.18% -0.33% -0.67% -1.16% 0.42% -1.75%
 
1952-4 -0.21% 4 0.47% 5 0.17% 6 -0.13% 1 -0.25% 2 -0.72% 3 -0.68%
1956-4 -0.23% 1 -0.82% 2 -0.36% 3 0.85% 4 1.05% 5 0.81% 1 1.31%
1960-4 -0.31% 5 -1.01% 1 0.33% 2 0.00% 3 -0.87% 4 -0.35% 5 -2.21%
1964-4 -0.14% 4 -0.78% 5 -0.50% 1 0.69% 2 -0.25% 3 -0.30% 4 -1.28%
1968-4 1.22% 2 0.15% 3 0.31% 4 0.30% 5 0.26% 1 0.13% 2 2.36%
Avg 0.07% -0.40% -0.01% 0.34% -0.01% -0.09% -0.10%
 
1972-4 -0.14% 5 -0.64% 1 -0.99% 2 -0.21% 3 0.15% 4 0.58% 5 -1.26%
1976-4 -0.67% 5 0.14% 1 -0.56% 2 0.27% 3 0.00% 4 -0.48% 5 -1.30%
1980-4 0.29% 3 0.65% 4 0.73% 5 0.46% 1 0.21% 2 0.41% 3 2.73%
1984-4 -0.77% 1 0.81% 2 0.37% 3 1.04% 4 -0.26% 5 0.10% 1 1.29%
1988-4 1.45% 5 0.89% 1 0.56% 2 -0.05% 3 -0.45% 4 -0.49% 5 1.91%
Avg 0.03% 0.37% 0.02% 0.30% -0.07% 0.02% 0.68%
 
1992-4 0.44% 4 -0.63% 5 -0.14% 1 0.16% 2 0.71% 3 0.71% 4 1.25%
1996-4 0.57% 2 -0.22% 3 0.42% 4 0.09% 5 0.11% 1 0.00% 2 0.97%
2000-4 0.49% 4 -0.32% 1 3.30% 2 -1.09% 3 0.27% 4 -0.85% 5 1.79%
2004-4 0.06% 5 -0.44% 1 0.23% 2 -1.38% 3 -0.76% 4 -0.59% 5 -2.89%
2008-4 0.29% 3 0.64% 4 0.65% 5 -0.11% 1 -0.39% 2 -0.38% 3 0.71%
Avg 0.37% -0.19% 0.89% -0.46% -0.01% -0.22% 0.37%
 
SPX summary for Presidential Year 4 1928 - 2008
Averages 0.09% 0.01% 0.17% -0.06% -0.28% 0.03% -0.04%
% Winners 52% 57% 67% 57% 48% 38% 52%
MDD 4/29/1932 7.02% -- 4/29/1936 6.82% -- 4/30/2004 2.92%
 
SPX summary for all years 1928 - 2011
Averages -0.14% -0.21% 0.05% -0.11% -0.03% 0.27% -0.17%
% Winners 41% 46% 57% 51% 50% 59% 51%
MDD 4/29/1932 7.02% -- 4/29/1936 6.82% -- 4/30/1938 6.46%


Money supply (M2)

The money supply chart was provided by Gordon Harms. M2 growth leveled off last week.


Conclusion

Not only has the market been lacking vigor that is consistent with the historical pattern for the coming week. There is nothing bad enough to cause concern and nothing good enough to get excited.

I expect the major averages to be higher on Friday April 27 than they were on Friday April 20.

Last week the major indices were up a little except for the OTC which was down a little so I am calling last weeks positive forecast a tie.

This report is free to anyone who wants it, so please tell your friends. They can sign up at: http://alphaim.net/signup.html. If it is not for you, reply with REMOVE in the subject line.

In his latest newsletter, Jerry Minton looks at what it takes to be #1 over the long-term. You can get his bi-weekly letter for free by subscribing at the home page at www.alphaim.net.

Good Luck,

YTD W 4 /L6 /T 6

 

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