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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…

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Technical Market Report for November 7, 2015

The good news is:
• Last week the secondaries outperformed the blue chips for the first time in quite a while.


The negatives

The advance - decline lines (ADL) have been persistently weak and new lows have remained high.

New lows rose on both the NYSE and NASDAQ over the past week. On Friday there were 85 new lows on the NYSE and 76 on the NASDAQ. Both of those numbers are high enough for concern.

ADL's are a running total of declining issues subtracted from advancing issues.

The chart below covers the past 6 months showing the NASDAQ composite (OTC) in blue and an ADL calculated from NASDAQ issues in green. Dashed vertical lines have been drawn on the 1st trading day of each month.

Ideally the ADL line would be running parallel to the index line.

OTC ADL

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

The NYSE ADL has been stronger than the OTC ADL, but it has also come up short for the past 2 weeks.

NYSE ADL


The positives

You have to go back to mid July to find more NASDAQ new highs than we had on Friday.

The chart below covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH), in green.

OTC NH continued its upward move.

OTC NH

The next chart is similar to the one above except it shows the SPX in red and NY NH, in green, has been calculated from NYSE data.

NY NH has been the stronger of the new high indicators.

NY NH

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 had a volatile week finishing at 58% very near where it was a week ago.

NY HL Ratio

The next chart 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 was the stronger of the two HL Ratio indicators for the first time in a month.

OTC HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of November during the 3rd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for that period.

OTC data covers the period from 1963 to 2014 while SPX data runs from 1953 to 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 a little weaker during the 3rd year of the Presidential Cycle than other years.

Report for the week before the 2nd Friday of November
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.

OTC Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1963-3 0.06% 0.00% -0.93% -0.20% 0.11% -0.96%
1967-3 -0.42% 0.00% -0.48% -0.62% 0.08% -1.45%
1971-3 -0.03% 0.28% -0.81% -1.07% 0.16% -1.47%
 
1975-3 0.32% 0.70% 1.63% -0.06% -0.30% 2.28%
1979-3 -0.56% -0.33% -1.12% 0.47% 0.81% -0.74%
1983-3 -0.75% -0.57% 0.53% 0.77% 1.48% 1.46%
1987-3 -1.83% -1.64% 0.83% 1.95% -0.32% -1.00%
1991-3 -0.63% 0.25% 0.12% 1.08% 0.51% 1.32%
Avg -0.69% -0.32% 0.40% 0.84% 0.44% 0.67%
 
1995-3 -0.34% -1.71% 0.38% 1.69% -0.16% -0.14%
1999-3 1.34% -0.61% 0.99% 1.32% 0.74% 3.78%
2003-3 -1.48% -0.56% 2.19% -0.29% -1.89% -2.02%
2007-3 -0.54% 1.07% -2.70% -1.92% -2.52% -6.62%
2011-3 0.34% 1.20% -3.88% 0.13% 2.04% -0.17%
Avg -0.13% -0.12% -0.60% 0.19% -0.36% -1.03%
 
OTC summary for Presidential Year 3 1963 - 2011
Avg -0.35% -0.18% -0.25% 0.25% 0.06% -0.44%
Win% 31% 45% 54% 54% 62% 31%
 
OTC summary for all years 1963 - 2014
Avg 0.01% 0.14% -0.21% 0.18% -0.06% 0.05%
Win% 50% 62% 54% 58% 61% 50%
 
SPX Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1955-3 0.43% 0.00% 1.04% 0.25% 1.16% 2.88%
1959-3 -0.17% -0.03% 0.02% -0.56% -0.56% -1.31%
1963-3 -0.51% 0.00% -0.87% 0.34% 0.41% -0.63%
1967-3 -0.33% 0.00% -0.37% 0.49% 0.68% 0.47%
1971-3 -0.07% 0.07% -1.11% -1.38% 0.00% -2.49%
Avg -0.13% 0.02% -0.26% -0.17% 0.42% -0.22%
 
1975-3 0.01% 0.59% 1.47% -0.16% -0.08% 1.83%
1979-3 -0.67% -0.61% -1.31% 0.43% 1.21% -0.96%
1983-3 -0.33% -0.09% 1.37% 0.27% 1.14% 2.36%
1987-3 -2.89% -1.71% 1.21% 2.74% -1.16% -1.81%
1991-3 -0.27% -0.40% 0.32% 0.96% -0.21% 0.41%
Avg -0.83% -0.45% 0.61% 0.85% 0.18% 0.36%
 
1995-3 -0.36% -0.36% 0.92% 0.26% -0.09% 0.37%
1999-3 0.49% -0.85% 0.60% 0.58% 1.06% 1.88%
2003-3 -0.58% -0.05% 1.15% -0.01% -0.76% -0.26%
2007-3 -0.50% 1.20% -2.94% -0.06% -1.43% -3.71%
2011-3 0.63% 1.17% -3.67% 0.86% 1.95% 0.94%
Avg -0.06% 0.22% -0.79% 0.33% 0.14% -0.16%
 
SPX summary for Presidential Year 3 1955 - 2011
Avg -0.34% -0.09% -0.15% 0.33% 0.24% 0.00%
Win% 27% 33% 60% 67% 50% 53%
 
SPX summary for all years 1953 - 2014
Avg 0.00% 0.10% -0.10% 0.22% -0.02% 0.18%
Win% 53% 51% 57% 58% 59% 56%


Money supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth jumped up to its long term trend last week.

S&P500 and M2 Money Supply Charts


Conclusion

New lows have been increasing, the AD lines have been weak and Seasonality is weak for the next 2 weeks.

I expect the major averages to be lower on Friday November 13 than they were on Friday November 6.

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

Good Luck,

YTD W 17 / L 15 / T 12

 

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