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Technical Market Report for June 23, 2012

The good news is:
• The secondaries outperformed the blue chips last week.


The negatives

The negatives disappeared.


The positives

New lows continued declining last week and held below threatening levels during Thursday's big decline.

The chart below covers the past 6 months showing the NASDAQ composite (OTC) in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in orange. OTC NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good). Dashed vertical lines have been drawn on the 1st trading day of each month.

OTC NL continued to rise even during Thursday's big drop.

The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NL, in dark blue has been calculated from NYSE data.

NY NL has also been moving sharply upward.

The next chart shows the OTC in blue and the ratio of NASDAQ new highs to new highs + new lows (OTC HL Ratio) in red. Dashed horizontal lines have been drawn at 10% levels for the indicator the line is solid at the neutral 50% level.

OTC HL Ratio rose and held above the neutral level last week.

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

NY HL Ratio finished comfortably above the neutral level last week.


Seasonality

Next week includes the last 5 trading days of June during the 4th year of the Presidential Cycle.

The tables below show the daily return on a percentage basis for the last 5 trading days of June 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 coming week have been mixed, down slightly over all over all periods for the SPX and up slightly over all periods for the OTC.

Report for the last 5 days of June.
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
  Day5 Day4 Day3 Day2 Day1 Totals
1964-4 -0.13% 3 0.38% 4 0.28% 5 0.40% 1 -0.05% 2 0.88%
1968-4 -0.14% 5 0.19% 1 0.39% 2 -0.33% 4 -0.22% 5 -0.11%
 
1972-4 -0.70% 1 0.37% 2 -0.16% 3 -0.18% 4 0.56% 5 -0.10%
1976-4 0.68% 4 0.28% 5 -0.20% 1 0.27% 2 0.23% 3 1.26%
1980-4 0.43% 2 0.69% 3 0.16% 4 0.11% 5 -0.88% 1 0.51%
1984-4 -0.11% 1 -0.82% 2 -0.70% 3 0.47% 4 0.56% 5 -0.60%
1988-4 0.15% 5 -0.67% 1 0.69% 2 0.00% 3 0.77% 4 0.93%
Avg 0.09% -0.03% -0.04% 0.13% 0.25% 0.40%
 
1992-4 -0.36% 3 -0.58% 4 -0.07% 5 2.00% 1 0.86% 2 1.86%
1996-4 0.64% 1 -0.87% 2 -1.65% 3 1.10% 4 1.63% 5 0.85%
2000-4 1.74% 1 -1.36% 2 2.11% 3 -1.60% 4 2.29% 5 3.18%
2004-4 -0.27% 4 0.49% 5 -0.28% 1 0.75% 2 0.63% 3 1.32%
2008-4 -0.73% 2 1.39% 3 -3.33% 4 -0.25% 5 -0.98% 1 -3.89%
Avg 0.20% -0.18% -0.64% 0.40% 0.89% 0.66%
 
OTC summary for Presidential Year 4 1964 - 2008
Averages 0.10% -0.04% -0.23% 0.23% 0.45% 0.51%
% Winners 42% 58% 42% 58% 67% 67%
MDD 6/30/2008 4.51% -- 6/26/1996 2.50% -- 6/27/1984 1.62%
 
OTC summary for all years 1963 - 2011
Averages -0.13% -0.06% 0.05% 0.12% 0.20% 0.19%
% Winners 45% 45% 55% 63% 61% 63%
MDD 6/30/2010 6.43% -- 6/30/1970 6.40% -- 6/29/1965 4.79%
 
SPX Presidential Year 4
  Day5 Day4 Day3 Day2 Day1 Totals
1928-4 1.14% 2 0.96% 3 1.11% 4 0.37% 5 0.26% 6 3.84%
 
1932-4 -0.22% 6 -3.27% 1 0.00% 2 1.58% 3 -1.77% 4 -3.68%
1936-4 -1.06% 4 -0.33% 5 0.13% 6 -0.53% 1 -0.34% 2 -2.13%
1940-4 -2.87% 2 -0.61% 3 1.03% 4 1.32% 5 0.00% 6 -1.14%
1944-4 0.54% 1 0.31% 2 -0.54% 3 -0.08% 4 0.31% 5 0.54%
1948-4 -0.24% 4 -0.36% 5 -1.31% 1 0.48% 2 0.30% 3 -1.12%
Avg -0.77% -0.85% -0.14% 0.55% -0.30% -1.50%
 
1952-4 0.16% 2 0.24% 3 0.36% 4 0.32% 5 0.52% 1 1.62%
1956-4 -0.39% 1 0.67% 2 0.75% 3 0.13% 4 -0.34% 5 0.82%
1960-4 0.16% 5 -0.61% 1 -0.68% 2 0.00% 3 -0.04% 4 -1.17%
1964-4 0.36% 3 0.19% 4 0.31% 5 0.22% 1 0.06% 2 1.13%
1968-4 0.15% 5 -0.27% 1 -0.31% 2 -0.10% 4 -0.40% 5 -0.93%
Avg 0.09% 0.04% 0.09% 0.11% -0.04% 0.30%
 
1972-4 -0.73% 1 -0.10% 2 -0.33% 3 -0.19% 4 0.30% 5 -1.05%
1976-4 0.52% 4 -0.07% 5 -0.28% 1 0.42% 2 0.40% 3 1.00%
1980-4 0.55% 2 1.37% 3 -0.45% 4 -0.16% 5 -1.52% 1 -0.21%
1984-4 -0.32% 1 -0.82% 2 -0.70% 3 0.79% 4 0.22% 5 -0.82%
1988-4 -0.38% 5 -1.72% 1 1.21% 2 -0.49% 3 0.93% 4 -0.45%
Avg -0.07% -0.27% -0.11% 0.07% 0.07% -0.31%
 
1992-4 -0.05% 3 -0.18% 4 0.08% 5 1.36% 1 -0.20% 2 1.02%
1996-4 0.30% 1 -0.05% 2 -0.61% 3 0.63% 4 0.31% 5 0.57%
2000-4 0.96% 1 -0.32% 2 0.29% 3 -0.85% 4 0.85% 5 0.92%
2004-4 -0.30% 4 -0.55% 5 -0.10% 1 0.25% 2 0.41% 3 -0.28%
2008-4 -0.28% 2 0.58% 3 -2.94% 4 -0.37% 5 0.13% 1 -2.88%
Avg 0.13% -0.10% -0.65% 0.20% 0.30% -0.13%
 
SPX summary for Presidential Year 4 1928 - 2008
Averages -0.09% -0.23% -0.14% 0.24% 0.02% -0.21%
% Winners 48% 33% 43% 57% 62% 43%
MDD 6/30/1932 3.70% -- 6/26/1940 3.47% -- 6/27/2008 3.30%
 
SPX summary for all years 1928 - 2011
Averages -0.18% -0.01% -0.08% 0.13% 0.12% -0.03%
% Winners 44% 45% 51% 58% 57% 51%
MDD 6/29/1950 8.88% -- 6/29/1939 5.93% -- 6/30/2010 5.62%


Money supply (M2)

The money supply chart was provided by Gordon Harms. M2 growth accelerated sharply last week.

M2


Conclusion

All of the indicators are moving upward and Thursday's sharp decline looks like a brief correction in an up market.

I expect the major averages to be higher on Friday June 29 than they were on Friday June 22.

Last week the secondaries were up a little while the blue chips were 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 introduces the soon to be released "Alpha Seasonal Index". You can get his bi-weekly letter free by subscribing at the home page at www.alphaim.net.

Good Luck,

YTD W 7 /L11/T 7

 

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