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Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

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Technical Market Report for May 23, 2015

The good news is:
• Most of the major indices closed at all time highs at some time in the past week.


The negatives

Considering the major indices are very near their all time highs, 52 week new highs of the individual issues are anemic.

The chart below covers the past 6 months showing the S&P500 (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 is just off its low of the past 6 months while the SPX is just off its all time high.

NY NH

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

OTC NH has been stronger than NY NH, but remains closer to its low of the past 6 months than its high.

OTC NH


The positives

New lows have been slightly elevated, but remain below threatening levels.

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

NY HL Ratio finished the week nearly unchanged at 72%.

NY HL Ratio

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

OTC HL Ratio fell a little to finish the week at a comfortably positive 66%.

OTC HL Ratio


Seasonality

Next week includes the last 4 trading days of May during the 3rd year of the Presidential Cycle.

The tables below show the daily change, on a percentage basis for the last 4 trading days of May during the 3rd year of the Presidential Cycle.

OTC data covers the period from 1963 to 2014 while SPX data runs from 1928 to 2014 There are summaries for both the 3rd year of the Presidential Cycle and all years combined.

Average returns for the coming week have been positive by all measures and stronger during the 3rd year of the Presidential Cycle than other years.

Last 4 days of May.
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 3
  Day4 Day3 Day2 Day1 Totals
1963-3 0.27% 1 0.24% 2 0.09% 3 1.05% 5 1.65%
1967-3 -0.90% 4 0.87% 5 -0.16% 1 -0.63% 3 -0.82%
1971-3 -0.85% 2 0.03% 3 0.07% 4 0.60% 5 -0.15%
 
1975-3 -0.16% 2 -0.62% 3 -0.24% 4 1.61% 5 0.59%
1979-3 0.44% 5 -0.17% 2 -0.81% 3 0.02% 4 -0.51%
1983-3 0.59% 3 0.72% 4 0.21% 5 -1.06% 2 0.45%
1987-3 0.99% 2 0.28% 3 0.43% 4 0.53% 5 2.23%
1991-3 0.92% 2 0.37% 3 0.83% 4 0.58% 5 2.70%
Avg 0.56% 0.12% 0.08% 0.34% 1.09%
 
1995-3 -0.08% 4 -0.62% 5 -1.51% 2 0.68% 3 -1.52%
1999-3 -2.97% 2 1.81% 3 -0.20% 4 2.12% 5 0.77%
2003-3 3.09% 2 0.42% 3 0.75% 4 1.33% 5 5.59%
2007-3 0.76% 5 0.58% 2 0.80% 3 0.46% 4 2.60%
2011-3 0.55% 3 0.78% 4 0.50% 5 1.37% 2 3.21%
Avg 0.27% 0.59% 0.07% 1.19% 2.13%
 
OTC summary for Presidential Year 3 1963 - 2011
Averages 0.20% 0.36% 0.06% 0.67% 1.29%
% Winners 62% 77% 62% 85% 69%
MDD 5/25/1999 2.97% -- 5/30/1995 2.20% -- 5/31/1983 1.06%
 
OTC summary for all years 1963 - 2014
Averages 0.11% 0.03% 0.26% 0.24% 0.64%
% Winners 54% 60% 60% 67% 62%
MDD 5/30/2001 8.65% -- 5/27/1970 3.17% -- 5/25/1999 2.97%
 
SPX Presidential Year 3
  Day4 Day3 Day2 Day1 Totals
1931-3 0.07% 2 -1.12% 3 0.38% 4 -2.18% 5 -2.85%
 
1935-3 0.70% 1 -1.79% 2 -1.62% 3 -1.14% 5 -3.85%
1939-3 0.35% 5 0.61% 6 0.78% 1 -0.43% 3 1.31%
1943-3 0.76% 3 0.25% 4 0.25% 5 0.50% 6 1.75%
1947-3 -0.49% 1 -0.14% 2 1.56% 3 0.77% 4 1.69%
1951-3 0.24% 6 0.62% 1 0.66% 2 0.80% 4 2.31%
Avg 0.31% -0.09% 0.32% 0.10% 0.64%
 
1955-3 0.37% 3 0.66% 4 0.21% 5 -0.05% 2 1.20%
1959-3 -0.15% 2 0.17% 3 0.34% 4 0.50% 5 0.86%
1963-3 -0.21% 1 0.20% 2 0.46% 3 0.67% 5 1.11%
1967-3 1.12% 4 -0.23% 5 -0.54% 1 -1.56% 3 -1.21%
1971-3 -0.66% 2 0.12% 3 -0.19% 4 0.23% 5 -0.50%
Avg 0.09% 0.19% 0.06% -0.04% 0.29%
 
1975-3 -0.26% 2 -0.70% 3 -0.03% 4 1.64% 5 0.64%
1979-3 0.29% 5 -0.17% 2 -0.94% 3 -0.03% 4 -0.85%
1983-3 0.40% 3 -0.44% 4 -0.62% 5 -1.26% 2 -1.91%
1987-3 2.46% 2 -0.13% 3 0.70% 4 -0.23% 5 2.81%
1991-3 1.18% 2 0.22% 3 1.09% 4 0.74% 5 3.23%
Avg 0.81% -0.24% 0.04% 0.17% 0.78%
 
1995-3 0.00% 4 -0.93% 5 -0.01% 2 1.88% 3 0.92%
1999-3 -1.71% 2 1.59% 3 -1.79% 4 1.59% 5 -0.32%
2003-3 1.96% 2 0.18% 3 -0.38% 4 1.47% 5 3.23%
2007-3 0.55% 5 0.16% 2 0.80% 3 0.03% 4 1.53%
2011-3 0.32% 3 0.40% 4 0.41% 5 1.06% 2 2.18%
Avg 0.22% 0.28% -0.20% 1.20% 1.51%
 
SPX summary for Presidential Year 3 1931 - 2011
Averages 0.35% -0.02% 0.07% 0.24% 0.63%
% Winners 67% 57% 57% 62% 67%
MDD 5/31/1935 4.49% -- 5/29/1931 2.91% -- 5/31/1967 2.31%
 
SPX summary for all years 1928 - 2014
Averages 0.10% -0.05% 0.23% 0.03% 0.30%
% Winners 57% 48% 62% 58% 62%
MDD 5/31/1932 12.52% -- 5/28/1962 8.45% -- 5/31/1935 4.49%


Conclusion

The breadth indicators deteriorated a little at the end of last week, but seasonality for the coming week has been quite strong for the past 20 - 30 years.

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

Last week the Dow Jones Industrial Average was down slightly while all of the other major averages were up, so I am calling last weeks positive forecast a tie.

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

Good Luck,

YTD W 8 / L 7 / T 5

 

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