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Technical Market Report for September 24, 2016

The good news is:
• The NASDAQ composite (OTC) closed at an all time high last Thursday.


The Negatives

New highs failed to confirm last weeks rally.

The first chart covers the past 6 months showing the S&P 500 (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.

This chart is not quite as bad as it looks.

On Thursday the SPX was within 1% of its all time high and NY NH was well off its early July high, but the value of 102 is still pretty strong. 2 months ago it was 247.

SOX and NY NH Daily Chart

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

NASDAQ new highs have been deteriorating, however OTC NH has been stronger than NY NH and that is a good thing.

OTC and OTC NH Daily Chart


The positives

New lows decreased and new highs increased last week.

The next chart 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 sharply to 80% last week.

OTC and OTC HL Ratio Daily Chart

The next chart 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 very strong 86%.

SPX and NY HL Ratio Daily Chart


Seasonality

Next week includes the last 5 trading days 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 1928 to 2015. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

Average returns for the coming week have been negative by all measures.

Report for the last 5 days of September.
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 4
  Day5 Day4 Day3 Day2 Day1 Totals
1964-4 0.21% 4 0.56% 5 -0.05% 1 0.00% 2 0.26% 3 0.98%
1968-4 0.03% 1 0.14% 2 -0.09% 4 -0.08% 5 -0.04% 1 -0.04%
1972-4 -0.50% 1 0.20% 2 1.16% 3 0.45% 4 0.37% 5 1.68%
 
1976-4 0.04% 5 0.14% 1 -0.87% 2 -0.40% 3 -0.01% 4 -1.10%
1980-4 0.07% 3 -0.58% 4 -1.69% 5 -2.61% 1 1.06% 2 -3.75%
1984-4 -0.74% 1 -0.31% 2 0.09% 3 0.02% 4 -0.14% 5 -1.09%
1988-4 -0.58% 1 -0.14% 2 0.28% 3 0.72% 4 0.43% 5 0.71%
1992-4 0.51% 4 -1.49% 5 -0.32% 1 0.40% 2 0.98% 3 0.07%
Avg -0.14% -0.48% -0.50% -0.37% 0.46% -1.03%
 
1996-4 0.31% 2 0.77% 3 0.27% 4 0.17% 5 -0.26% 1 1.27%
2000-4 -1.65% 1 -1.39% 2 -0.89% 3 3.34% 4 -2.79% 5 -3.38%
2004-4 -0.37% 5 -1.04% 1 0.54% 2 1.29% 3 0.15% 4 0.57%
2008-4 0.11% 3 1.43% 4 -0.15% 5 -9.14% 1 4.97% 2 -2.78%
2012-4 -0.60% 1 -1.36% 2 -0.77% 3 1.39% 4 -0.65% 5 -2.00%
Avg -0.44% -0.32% -0.20% -0.59% 0.28% -1.27%
 
OTC summary for Presidential Year 4 1964 - 2012
Averages -0.24% -0.24% -0.19% -0.34% 0.33% -0.68%
% Winners 54% 46% 38% 62% 54% 46%
MDD 9/29/2008 9.28% -- 9/29/1980 4.81% -- 9/27/2000 3.88%
 
OTC summary for all years 1963 - 2015
Averages -0.02% -0.09% -0.20% -0.15% -0.05% -0.50%
% Winners 57% 48% 47% 44% 45% 45%
MDD 9/29/2008 9.28% -- 9/30/1974 6.69% -- 9/30/2003 6.04%
 
SPX Presidential Year 4
  Day5 Day4 Day3 Day2 Day1 Totals
1928-4 -0.09% 2 -0.05% 3 -1.26% 4 0.05% 5 1.09% 6 -0.27%
1932-4 -5.63% 1 1.12% 2 2.83% 3 -3.11% 4 -0.25% 5 -5.04%
 
1936-4 -1.79% 5 0.94% 6 0.62% 1 -0.43% 2 -0.31% 3 -0.97%
1940-4 -0.18% 3 -0.65% 4 -1.76% 5 0.66% 6 0.09% 1 -1.84%
1944-4 -0.24% 2 0.00% 3 -0.31% 4 0.39% 5 0.31% 6 0.16%
1948-4 0.26% 5 -2.63% 1 1.12% 2 1.24% 3 -0.39% 4 -0.40%
1952-4 0.36% 3 0.08% 4 -0.32% 5 -0.20% 1 -0.57% 2 -0.65%
Avg -0.32% -0.45% -0.13% 0.33% -0.17% -0.74%
 
1956-4 -0.39% 1 -1.40% 2 0.15% 3 -0.48% 4 -0.55% 5 -2.66%
1960-4 -1.56% 1 -0.23% 2 -0.87% 3 0.27% 4 1.71% 5 -0.68%
1964-4 0.11% 4 0.25% 5 0.08% 1 -0.05% 2 -0.07% 3 0.32%
1968-4 0.57% 1 0.34% 2 -0.22% 4 -0.05% 5 0.35% 1 0.99%
1972-4 -0.43% 1 0.11% 2 1.38% 3 0.63% 4 0.18% 5 1.87%
Avg -0.34% -0.18% 0.10% 0.06% 0.32% -0.03%
 
1976-4 -0.11% 5 0.44% 1 -1.26% 2 -0.52% 3 -0.12% 4 -1.57%
1980-4 0.73% 3 -1.27% 4 -1.84% 5 -2.22% 1 1.55% 2 -3.05%
1984-4 -0.24% 1 0.21% 2 0.40% 3 0.41% 4 -0.52% 5 0.26%
1988-4 -0.33% 1 -0.23% 2 0.31% 3 1.30% 4 -0.25% 5 0.80%
1992-4 0.25% 4 -0.98% 5 0.55% 1 0.04% 2 0.24% 3 0.09%
Avg 0.06% -0.37% -0.37% -0.20% 0.18% -0.69%
 
1996-4 -0.13% 2 0.03% 3 0.01% 4 0.05% 5 0.17% 1 0.12%
2000-4 -0.67% 1 -0.82% 2 -0.04% 3 2.22% 4 -1.49% 5 -0.81%
2004-4 0.16% 5 -0.59% 1 0.59% 2 0.43% 3 -0.02% 4 0.56%
2008-4 -0.20% 3 1.97% 4 0.32% 5 -8.79% 1 5.27% 2 -1.43%
2012-4 -0.22% 1 -1.05% 2 -0.57% 3 0.96% 4 -0.45% 5 -1.33%
Avg -0.21% -0.09% 0.06% -1.03% 0.70% -0.58%
 
SPX summary for Presidential Year 4 1928 - 2012
Averages -0.44% -0.20% -0.01% -0.33% 0.27% -0.71%
% Winners 32% 45% 55% 59% 45% 41%
MDD 9/29/2008 8.79% -- 9/26/1932 5.63% -- 9/29/1980 5.24%
 
SPX summary for all years 1928 - 2015
Averages -0.16% -0.12% 0.06% -0.21% -0.02% -0.45%
% Winners 48% 45% 57% 52% 45% 49%
MDD 9/30/1931 11.08% -- 9/29/2008 8.79% -- 9/30/1974 8.47%


Money supply (M2) and interest rates

The money supply and interest rate charts were provided by Gordon Harms. M2 growth has been accelerating all year.

S&P500 and M2 Money Supply Charts

It is difficult to detect a monthly change in this chart, but, over the past several years the trend has been toward compression and with the Fed talking about raising rates that pattern is likely to continue.

S&P500 and Yield Curve


Conclusion

Last week, while the major indices were up, the breadth indicators improved and the secondaries outperformed the blue chips.

I expect the major averages to be higher on Friday September 30 than they were on Friday September 23.

Last weeks negative forecast was a miss.

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

Good Luck,

YTD W 15 / L 16 / T 7

 

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