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Technical Market Report for September 3, 2016

The good news is:
• It is the same old story, new lows remain insignificant and the secondaries continue to outperform the blue chips.


The Negatives

Volume is at its lowest level in a long time and continues to decline.


The positives

The secondaries continued to outperform the blue chips.

The secondaries were up slightly more than 1% for the first time in several weeks.

The first chart covers the past 6 months showing the NASDAQ composite (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 vertical lines have been drawn on the 1st trading day of each month. Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the 50%, neutral level.

OTC HL Ratio at 84% remains very strong.

OTC and OTC HL Ratio Chart

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

NY HL Ratio continued to hold above 90%.

SPX and NYSE HL Ratio Chart

The next chart shows the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH) in green.

OTC NH rose a bit to 138 last week, near its highest level of the last 2 years.

OTC and OTC NH Chart

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

NY NH continued its fall, but remains strong at 169.

SPX and NYSE NH Chart


Seasonality

Next week includes the 4 trading days prior to the 2nd Friday of September during the 4th 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 2015 while SPX data runs from 1953 to 2015. There are summaries for both the 4th 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 modestly positive and stronger during the 4th year of the Presidential Cycle than other years.

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

OTC Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1964-4 0.00% 0.29% 0.38% 0.07% -0.24% 0.50%
1968-4 0.16% 0.27% 0.00% -0.01% -0.50% -0.09%
1972-4 0.00% -0.28% -0.54% -0.32% -0.06% -1.21%
 
1976-4 0.00% 0.21% 0.05% -0.44% 0.36% 0.19%
1980-4 -0.62% 0.21% 0.80% 0.99% 0.75% 2.13%
1984-4 -0.46% 0.51% -0.14% 0.75% 0.89% 1.55%
1988-4 0.00% 0.22% 0.17% 0.47% 0.49% 1.35%
1992-4 0.00% -0.40% 0.65% 1.10% 0.30% 1.66%
Avg -0.54% 0.15% 0.31% 0.58% 0.56% 1.38%
 
1996-4 0.82% 0.06% 0.40% 1.02% 1.96% 4.26%
2000-4 0.00% -2.15% -3.14% 2.12% -2.93% -6.09%
2004-4 0.00% 0.76% -0.43% 1.03% 1.32% 2.68%
2008-4 0.62% -2.64% 0.85% 1.32% 0.14% 0.29%
2012-4 -1.03% 0.02% 0.32% 1.33% 0.89% 1.52%
Avg 0.13% -0.79% -0.40% 1.37% 0.28% 0.53%
 
OTC summary for Presidential Year 4 1964 - 2012
Avg -0.09% -0.23% -0.05% 0.73% 0.26% 0.67%
Win% 50% 69% 67% 77% 69% 77%
 
OTC summary for all years 1963 - 2015
Avg -0.32% 0.02% -0.12% 0.09% 0.10% -0.04%
Win% 48% 51% 54% 64% 60% 60%
 
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 -0.52% -0.38% -0.70% -0.13% 0.47% -1.26%
1960-4 0.00% -0.89% -1.24% -0.09% 0.66% -1.56%
1964-4 0.00% 0.13% 0.22% 0.06% 0.42% 0.83%
1968-4 0.03% -0.49% 0.00% -0.21% 0.34% -0.33%
1972-4 0.00% -0.25% -0.61% -0.24% -0.13% -1.22%
Avg -0.25% -0.38% -0.58% -0.12% 0.35% -0.71%
 
1976-4 0.00% 0.70% -0.09% -0.51% 0.24% 0.34%
1980-4 -1.26% 0.62% 0.60% 0.68% -0.10% 0.54%
1984-4 -0.07% 0.12% 0.14% 1.98% 0.50% 2.67%
1988-4 0.00% 0.42% 0.11% 0.00% 0.36% 0.89%
1992-4 0.00% -0.63% 0.46% 0.86% -0.09% 0.60%
Avg -0.66% 0.24% 0.24% 0.60% 0.18% 1.01%
 
1996-4 1.23% 0.01% 0.52% 0.58% 1.40% 3.74%
2000-4 0.00% -0.90% -0.98% 0.69% -0.53% -1.73%
2004-4 0.00% 0.69% -0.45% 0.19% 0.50% 0.92%
2008-4 2.05% -3.41% 0.61% 1.38% 0.21% 0.84%
2012-4 -0.61% 0.31% 0.21% 1.63% 0.40% 1.93%
Avg 0.89% -0.66% -0.02% 0.89% 0.39% 1.14%
 
SPX summary for Presidential Year 4 1956 - 2012
Avg 0.12% -0.26% -0.09% 0.46% 0.31% 0.48%
Win% 43% 53% 57% 67% 73% 67%
 
SPX summary for all years 1953 - 2015
Avg -0.26% 0.00% -0.06% -0.15% 0.07% -0.25%
Win% 44% 52% 56% 49% 63% 52%


Conclusion

Again, more of the same, no volume, no new lows and the secondaries were a little stronger then the blue chips.

I expect the major averages to be higher on Friday September 9 than they were on Friday September 2.

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

Good Luck,

YTD W 14 / L 14 / T 7

 

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