• 539 days Will The ECB Continue To Hike Rates?
  • 539 days Forbes: Aramco Remains Largest Company In The Middle East
  • 541 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 941 days Could Crypto Overtake Traditional Investment?
  • 946 days Americans Still Quitting Jobs At Record Pace
  • 948 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 951 days Is The Dollar Too Strong?
  • 951 days Big Tech Disappoints Investors on Earnings Calls
  • 952 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 953 days China Is Quietly Trying To Distance Itself From Russia
  • 954 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 958 days Crypto Investors Won Big In 2021
  • 958 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 959 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 961 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 962 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 965 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 966 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 966 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 968 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Technical Market Report

The good news is:
 • The current decline will end soon leaving the market at a good pointfrom which to advance.

Short term

The NASDAQ new low indicator (OTC NL) is a 10% trend (19 day EMA) of NASDAQ new lows. OTC NL is plotted on an inverted Y axis so that then new lows are increasing the indicator moves downward and when new lows are decreasing the indicator moves upward (up is good). OTC NL is the best indicator I know of for identifying market bottoms. On a daily basis, OTC NL often gives false positives so it is prudent to wait until the indicator has been moving upward for 5 consecutive days before assuming a change in trend.

In the chart below the NASDAQ composite (OTC) is shown in red and OTC NL in blue. OTC NL went flat on Friday. The value of the indicator is 81 so any number of NASDAQ new lows greater than 81 will move the indicator downward and any number less than 81 will move the indicator upward.

Bollinger Bands (BB) are drawn 2 standard deviations either side of a simple 20 day moving average. An index will tag the upper BB near the beginning of an upward move and spend most of its time between the middle band (20 day SMA) and the upper band. The opposite is true during a downward move. Since the beginning of October the Russell 2000 (R2K), shown in the chart below, has spent most of its time at or near the lower BB.

Intermediate term

Summation indices (SI) are running totals of oscillator values.

The chart below shows the OTC in red, OTC AD SI calculated from NASDAQ advancing issues - declining issues, OTC HL SI calculated from NASDAQ new highs - new lows and OTC UD SI calculated from NASDAQ upside - downside volume. SI's are good intermediate term indicators and they are all moving sharply downward. Last Wednesday the AD and UD oscillators driving the SI's hit their lowest point since January. The HL oscillator is at its lowest point since February 2004.

Seasonality

Since the mid 1980's options expiration has often been blamed for unusual market behavior. Options expire on the 3rd Friday of the month which is next Friday. The tables below show how the market has behaved during the week preceding the 3rd Friday of October during the 1st year of the Presidential Cycle. There are summaries for the 1st year of the Presidential Cycle and for all years. OTC data covers the period from 1963 - 2004 and S&P 500 (SPX) data covers the period from 1928 - 2004. Since 1950, the week has been up about half of the time.

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 0.13% 0.39% 0.37% 0.26% 0.04% 1.19%
1969-1 0.65% 1.26% 1.27% 0.83% 0.36% 4.37%
1973-1 -0.85% 0.01% -0.42% 0.14% 0.38% -0.74%
1977-1 0.09% 0.11% -0.81% 0.15% -0.06% -0.51%
1981-1 0.01% 0.33% -1.30% 0.22% 0.21% -0.53%
 
Avg 0.01% 0.42% -0.18% 0.32% 0.18% 0.75%
 
1985-1 0.89% 0.25% 0.60% 0.55% 0.05% 2.33%
1989-1 -1.35% -0.23% 0.73% 1.62% -0.03% 0.75%
1993-1 0.44% 0.63% 0.84% 0.83% 0.26% 2.99%
1997-1 0.18% -0.53% -0.54% -1.38% -1.93% -4.20%
2001-1 -0.42% 1.52% -4.40% 0.39% 1.12% -1.78%
 
Avg -0.05% 0.33% -0.55% 0.40% -0.11% 0.02%
 
OTC summary for Presidential Year 1 1965 - 2001
Avg -0.02% 0.37% -0.37% 0.36% 0.04% 0.39%
Win% 70% 80% 50% 90% 70% 50%
 
OTC summary for all years 1963 -2004
Avg 0.21% -0.04% -0.18% 0.32% -0.15% 0.17%
Win% 61% 55% 46% 67% 55% 50%
 
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1929-1 -0.68% -0.82% -3.50% 1.54% -2.86% -6.32%
1933-1 -2.00% 3.26% -4.63% -2.00% 2.90% -2.47%
1937-1 -4.38% 0.00% -0.08% -1.97% -1.09% -7.52%
1941-1 0.00% -0.61% -0.61% -1.44% 0.42% -2.25%
 
1945-1 0.36% -0.78% -1.51% 0.49% 0.49% -0.95%
1949-1 -1.01% 0.70% 0.57% -0.19% -0.31% -0.24%
1953-1 0.00% -0.38% 0.47% 1.14% 0.79% 2.02%
1957-1 0.73% 1.04% -0.82% -1.65% -0.79% -1.47%
1961-1 -0.28% 0.03% 0.50% 0.35% 0.04% 0.65%
 
Avg -0.05% 0.12% -0.16% 0.03% 0.04% 0.00%
 
1965-1 0.57% -0.02% -0.01% -0.16% 0.21% 0.58%
1969-1 1.06% 1.22% 0.02% 0.68% -0.11% 2.86%
1973-1 -1.25% 0.13% -0.20% 0.04% 0.19% -1.09%
1977-1 -0.10% -0.01% -1.16% 0.31% -0.38% -1.33%
1981-1 -0.20% -0.35% -1.64% 0.77% -0.43% -1.86%
 
Avg 0.02% 0.19% -0.60% 0.33% -0.11% -0.17%
 
1985-1 1.13% -0.16% 1.02% -0.17% -0.33% 1.50%
1989-1 2.76% -0.49% 0.18% 1.57% 0.01% 4.02%
1993-1 0.12% 0.05% 0.08% 1.16% 0.57% 1.99%
1997-1 0.12% 0.23% -0.47% -1.09% -1.16% -2.37%
2001-1 -0.15% 0.69% -1.86% -0.79% 0.46% -1.65%
 
Avg 0.80% 0.06% -0.21% 0.14% -0.09% 0.70%
 
SPX summary for Presidential Year 1 1929 - 2001
Avg -0.19% 0.21% -0.72% -0.07% -0.07% -0.84%
Win% 47% 50% 37% 53% 53% 37%
 
SPX summary for all years 1928 - 2004
Avg 0.02% 0.22% -0.24% 0.02% -0.13% -0.11%
Win% 53% 47% 44% 51% 45% 53%

Conclusion

There is still no evidence of a bottom; however, the market is oversold and likely to bounce.

I expect the major indices to be higher on Friday October 21 than they were on Friday October 14.

Last weeks positive forecast for a bounce was a miss. The hoped for bounce from an oversold condition may have begun Thursday and Friday, but it was too late and too weak to save my forecast.

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.

Back to homepage

Leave a comment

Leave a comment