• 20 hours How Taxpayers Are Bankrolling The EV Revolution
  • 2 days The Coronavirus Is Crushing China’s Car Market
  • 3 days Fighting For Survival In The Streaming War
  • 4 days Want A Job? Forget About A Bachelor’s Degree
  • 4 days Another Major Car Maker Is Backing Hydrogen
  • 5 days Are Americans Finally Sold On Soccer?
  • 5 days Is The Tech Bubble About To Burst?
  • 6 days Coronavirus Could Cost Tourism Industry $80 Billion
  • 6 days What Web Traffic Trends Can Tell Us About The World
  • 6 days Miners Face Greater Headwinds
  • 7 days Boris Johnson Proposes Billion Dollar Bridge To Northern Ireland
  • 8 days Goldman Slashes Oil Price Forecast By $10
  • 9 days Tesla Raises $2 Billion In Share Selloff
  • 10 days What The T-Mobile Takeover Of Sprint Really Means For Markets
  • 10 days The U.S. Has Charged Huawei With Racketeering And Conspiracy
  • 10 days How Hydrogen Could Become The Fuel Of The Future
  • 11 days Millennials Can’t Retire, But They’ll Still Have To Help Their Parents
  • 11 days This Gold Miner Just Increased Its Dividends By 40%
  • 11 days Airbnb IPO Under Threat As China's Economy Drags
  • 12 days The Infamous Equifax Hack Just Became A National Security Issue
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 for January 7, 2017

The good news is:
• The NASDAQ composite (OTC) and S&P 500 (SPX) both closed at all time highs last Friday.


The Negatives

In spite of an up week for all of the major indices New Highs on both of the major exchanges continued to decline.

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

OTC NH continued falling in spite of a strong week for the index.

OTC and 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 with NYSE data.

The collapse of NY NH was arrested last week, but considering the index finished the week at an all time high, the performance was unimpressive.

SPX and NY NH


The Positives

While new highs have been collapsing, new lows have also been declining.

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 to a comfortable 82%.

OTC and OTC HL Ratio

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

NY HL Ratio rose to over 90%. Nothing really bad is likely to happen from this level.

SPX and NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of January during the 1st 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 modest and better for small caps than large caps.

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

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 0.31% 0.65% 0.55% 0.55% 0.31% 2.37%
1969-1 0.21% -1.10% -0.93% -1.97% -0.25% -4.04%
1973-1 0.35% 0.08% -0.02% 0.05% 0.57% 1.03%
 
1977-1 -0.23% -0.92% -0.40% 0.85% 0.37% -0.33%
1981-1 0.30% -0.05% -3.29% -0.74% 0.90% -2.87%
1985-1 -0.06% -0.02% 0.54% 1.34% 0.60% 2.41%
1989-1 0.14% -0.18% 0.19% 0.44% 0.02% 0.61%
1993-1 0.77% -0.43% 1.08% 1.30% 0.21% 2.92%
Avg 0.18% -0.32% -0.38% 0.64% 0.42% 0.55%
 
1997-1 0.43% 0.86% -0.55% 0.44% 0.44% 1.62%
2001-1 -0.49% 1.89% 3.40% 4.61% -0.53% 8.88%
2005-1 0.40% -0.83% 0.62% -1.05% 0.84% -0.02%
2009-1 -0.26% 1.50% -3.23% 1.12% -2.81% -3.67%
2013-1 -0.09% -0.23% 0.45% 0.51% 0.12% 0.77%
Avg 0.00% 0.64% 0.14% 1.13% -0.39% 1.52%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg 0.14% 0.09% -0.12% 0.57% 0.06% 0.74%
Win% 62% 38% 54% 77% 77% 62%
 
OTC summary for all years 1963 - 2016
Avg 0.31% -0.08% -0.07% 0.52% 0.12% 0.82%
Win% 63% 54% 52% 74% 67% 63%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 0.45% -0.68% -0.42% -0.15% -0.95% -1.74%
 
1957-1 -0.51% -0.37% -0.19% 0.24% -0.19% -1.03%
1961-1 0.56% 0.27% 0.29% 0.30% 0.47% 1.90%
1965-1 0.04% 0.25% 0.27% 0.00% 0.43% 0.98%
1969-1 -1.46% -1.22% -0.41% 0.42% -0.29% -2.97%
1973-1 -0.02% -0.10% -0.25% 0.68% -0.78% -0.47%
Avg -0.28% -0.23% -0.06% 0.41% -0.07% -0.32%
 
1977-1 0.18% -1.03% -0.69% 0.77% -0.18% -0.95%
1981-1 1.20% 0.11% -2.20% -1.50% 0.32% -2.08%
1985-1 0.34% -0.15% 0.73% 1.89% -0.24% 2.57%
1989-1 0.11% -0.21% 0.58% 0.41% 0.25% 1.14%
1993-1 0.44% 0.02% 0.46% 0.67% 0.28% 1.87%
Avg 0.45% -0.25% -0.22% 0.45% 0.08% 0.51%
 
1997-1 -0.05% 0.75% -0.64% 0.86% 0.61% 1.53%
2001-1 -0.19% 0.38% 0.96% 1.03% -0.64% 1.54%
2005-1 0.34% -0.61% 0.40% -0.86% 0.60% -0.13%
2009-1 -0.47% 0.78% -3.00% 0.34% -2.13% -4.48%
2013-1 -0.31% -0.32% 0.27% 0.76% 0.00% 0.38%
Avg -0.14% 0.20% -0.40% 0.43% -0.31% -0.23%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg 0.04% -0.13% -0.24% 0.39% -0.15% -0.12%
Win% 56% 44% 50% 80% 44% 50%
 
SPX summary for all years 1953 - 2016
Avg 0.08% -0.16% -0.24% 0.30% 0.00% -0.03%
Win% 56% 41% 44% 73% 52% 52%


Conclusion

The continued deterioration of new highs is troublesome while the simultaneous deterioration of new lows is reassuring.

I expect the major averages to be higher on Friday January 13 than they were on Friday January 6.

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

Good Luck,

YTD W 1 / L 0 / T 0

 

Back to homepage

Leave a comment

Leave a comment