• 4 hours Hedge Funds Having A Banner Year
  • 7 hours Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 10 hours BHP Turns Bullish On EVs
  • 12 hours Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 1 day The $90M Inflatable Rabbit Redefining Modern Art
  • 1 day Huawei’s Fate In The Air
  • 1 day Tesla Slashes Prices Again
  • 1 day The Modern History Of Financial Entropy
  • 2 days Italy’s Central Bank Embraces Sustainable Investing
  • 2 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 2 days Researchers Push To Limit Space Mining
  • 2 days Could China Start Dumping U.S. Treasury Bonds?
  • 3 days Is Winter Coming For HBO?
  • 3 days Rise Of EVs Signals Peak Gasoline
  • 4 days Jeff Bezos Doubles Down On Space Colonization Ambitions
  • 4 days Gold Mining Stocks Stuck In Limbo
  • 5 days Executive Order Targets Huawei Over Espionage
  • 5 days Why Now May Be The Best Time Ever To Hold Gold
  • 6 days Fake News Sinks Shares In UK-Based Bank
  • 6 days De Beers To Build $468 Million Diamond Recovery Ship
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,…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

  1. Home
  2. Markets
  3. Other

Technical Market Report for April 16, 2016

The good news is:
• The secondaries have been outperforming the blue chips.


The Negatives

NASDAQ breadth indicators continue to underperform NYSE breadth indicators. Considering the NASDAQ composite (OTC) is only about 5% off its all time high, the number of NASDAQ new highs has been abysmal.

The first chart 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. Dashed vertical lines have been drawn on the 1st trading day of each month.

In a healthy bull market OTC NH would be leading the way upward.

OTC and OTC NH Since October 14 Chart

The next chart is similar to the one above except it covers the past year. OTC NH has been deteriorating for quite a while.

OTC and OTC NH 1-Year Chart

The next chart is similar to the first chart except it shows the S&P 500 (SPX) in red and NY NH, in green has been calculated from NYSE data.

The NYSE has a lot more interest rate sensitive issues than the NASDAQ and the yield on 10 yr treasuries has fallen to around 1.7%. The NYSE new high list has been dominated by interest rate sensitive issues.

SPX and NY NH Since October 14 Chart

The next chart is similar to the one above except it covers the past year and a half.

NY NH looks pretty good here, but not quite as good as the shorter term chart suggests.

SPX and NY NH 18-Month Chart


The positives

While new highs have been disappointing, new lows have disappeared and nothing really bad happens without a significant increase in new lows.

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 50%, neutral level.

OTC HL Ratio rose to a very strong 73%.

OTC and OTC HL Ratio Chart

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

NY HL Ratio finished the week at a sensational 96%.

SPX and NY HL Ratio Chart


Seasonality

Next week includes the 5 trading days prior to the 4th Friday of April during the 4th year of the Presidential Cycle. Good Friday usually falls in April so there have been very few April's with 4 Fridays. There are 10 trading days left in April so tables below show the daily change, on a percentage basis for the last 10 trading days in April.

You may have to widen the window to avoid the word wrap.

OTC data covers the period from 1963 to 2015 while SPX data runs from 1928 to 2015. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

The coming week has been stronger during the 4th year of the Presidential Cycle than other times.

Report for the last 10 days of April.
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.

Presidential Year 4 Performance
Larger Image


Money supply (M2) and interest rates

The charts below were provided by Gordon Harms. It looks like there was a spike in M2 early in the month. And M2 growth is well above its long term trend.

S&P500 and M2 Money Supply Chart

An inverted yield curve (short term rates above long term rates) has been the best predictor of a recession. The chart below shows a comparison of 2yr - 30 yr rates over the past 16 years. It is difficult to imagine how the yield curve could invert when the Fed is holding short term rates at or near 0% and M2 is expanding rapidly.

Yield Curve


Conclusion

There is nothing alarming in the breadth indicators and seasonally the last half of April has been pretty strong, especially for the secondaries.

I expect the major averages to be higher on Friday April 22 than they were on Friday April 15.

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/

Bruce Stratton who announced his retirement as webmaster of Safehaven.com has found someone interested in taking over the day to day operations of the web site. I am happy to hear that. Safehaven has been carrying and archiving these reports since the early days.

Good Luck,

YTD W 8 / L 7 / T 0

 

Back to homepage

Leave a comment

Leave a comment