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The Problem With Modern Monetary Theory

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Modern monetary theory has been…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

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Welcome to Art Basel: The…

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Technical Market Report for April 11, 2015

The good news is:
• New lows have remained at insignificant levels.


The negatives

The new high list expands in a strong market. Most of the major indices are within 1% of their all time highs and the new high list looks anemic.

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.

The SPX was up to within 0.7% of its all time high while NY NH was flat.

NY NH Chart

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

The OTC finished the week 0.6% of its recent multi year high and within 2% of its all time high while OTC NH fell.

OTC NH Chart


The positives

New lows remained at insignificant levels last week.

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 for the indicator, the line is solid at the neutral 50% level for the indicator.

OTC HL Ratio rose to a very strong 78% on Friday.

OTC HL Ratio Chart

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

NY HL Ratio finished the week at a very strong 95%.

NY HL Ratio Chart


Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of April during the 3rd year of the Presidential Cycle.

The tables below show the daily change, on a percentage basis for the 5 trading days prior to the 3rd Friday of April during the 3rd year of the Presidential Cycle.

OTC data covers the period from 1963 to 2014 while SPX data runs from 1953 through 2014. There are summaries for both the 3rd year of the Presidential Cycle and all years combined. Prior to 1953 the market traded 6 days a week so that data has been ignored.

Average returns for the coming week have been strong by all measures.

Report for the week before the 3rd Friday of April.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.

OTC Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1963-3 0.56% 0.31% 0.34% 0.30% 0.30% 1.81%
1967-3 0.40% 0.57% 1.23% 0.31% 0.49% 3.01%
1971-3 0.18% -0.57% -0.01% 0.43% 0.64% 0.67%
 
1975-3 1.34% 0.23% 0.63% 0.33% -0.23% 2.30%
1979-3 0.15% 0.31% 0.36% -0.10% -0.20% 0.52%
1983-3 0.44% -0.34% 1.05% 0.71% 0.60% 2.45%
1987-3 -0.41% 0.20% -0.10% -0.17% -1.15% -1.64%
1991-3 -0.16% 1.18% 0.90% -0.92% -1.07% -0.06%
Avg 0.27% 0.32% 0.57% -0.03% -0.41% 0.72%
 
1995-3 0.66% 0.29% 0.68% 0.48% 0.36% 2.47%
1999-3 -5.57% 2.73% 3.26% 2.92% 1.16% 4.50%
2003-3 -0.08% 1.89% 1.02% -0.61% -1.56% 0.67%
2007-3 -0.11% 0.03% 0.92% 0.26% 0.11% 1.22%
2011-3 -0.32% -0.96% 0.61% -0.05% 0.16% -0.56%
Avg -1.08% 0.80% 1.30% 0.60% 0.05% 1.66%
 
OTC summary for Presidential Year 3 1963 - 2011
Avg -0.22% 0.45% 0.84% 0.30% -0.03% 1.34%
Win% 54% 77% 85% 62% 62% 77%
 
OTC summary for all years 1963 - 2014
Avg -0.42% 0.31% 0.25% 0.26% 0.14% 0.53%
Win% 45% 57% 69% 63% 63% 67%
 
SPX Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1955-3 0.82% -0.13% 0.16% 0.10% -0.81% 0.14%
1959-3 0.37% 0.50% 0.44% 0.83% 0.85% 2.99%
1963-3 0.10% 0.33% 0.27% 0.06% -0.09% 0.68%
1967-3 0.71% 0.87% 0.09% 0.18% 0.21% 2.05%
1971-3 0.50% -0.38% -0.24% 0.19% 0.47% 0.54%
Avg 0.50% 0.24% 0.14% 0.27% 0.13% 1.28%
 
1975-3 1.69% 0.82% 0.35% 0.75% -1.09% 2.51%
1979-3 0.34% 0.62% 0.29% -0.48% -0.21% 0.57%
1983-3 0.62% -0.64% 1.26% -0.41% 0.23% 1.06%
1987-3 -0.29% 2.44% -2.01% -0.13% -1.85% -1.83%
1991-3 0.21% 1.69% 0.73% -0.51% -1.10% 1.02%
Avg 0.51% 0.98% 0.13% -0.16% -0.80% 0.67%
 
1995-3 0.87% -0.14% 0.10% 0.17% 0.23% 1.22%
1999-3 -2.24% 1.30% 2.29% 1.70% -0.14% 2.91%
2003-3 -0.18% 2.17% 0.84% -0.83% -1.38% 0.62%
2007-3 -0.23% -0.04% 1.01% -0.08% -0.01% 0.66%
2011-3 -0.28% -0.78% 0.02% 0.01% 0.39% -0.64%
Avg -0.41% 0.50% 0.85% 0.20% -0.18% 0.95%
 
SPX sumamry for Presidential Year 3 1955 - 2011
Avg 0.20% 0.57% 0.37% 0.10% -0.29% 0.97%
Win% 67% 60% 87% 60% 40% 87%
 
SPX summary for all years 1953 - 2014
Avg -0.16% 0.30% 0.07% 0.11% -0.03% 0.29%
Win% 47% 55% 57% 63% 50% 65%


Money supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth tumbled last week.

SPX and M2 Money Supply Charts


Conclusion

Leadership continues to narrow while we are in the strongest period of the Presidential Cycle.

I expect the major averages to be higher on Friday April 17 than they were on Thursday April 10.

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

These reports are archived at: http://www.safehaven.com/

Good Luck,

YTD W 6 / L 5 / T 3

 

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