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Technical Market Report for January 21, 2017

The good news is:
• New lows have remained at benign levels.


The Negatives

New highs have continued to deteriorate and last week the blue chips outperformed the secondaries.

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.

OTC and OTC NH

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

NY NH also continued its fall last week.

SPX and NY NH


The Positives

While new highs have been collapsing they have continued to outnumber new lows by strong margins.

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 declined finishing the week at a strong 73%.

OTC and OTC HL Ratio

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

NY HL Ratio declined a little more to 83% last week, still, very strong.

SPX and NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 4th 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 1st 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 by all measures.

Report for the week before the 4th Friday of January.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 0.61% 0.39% 0.62% 0.75% 0.36% 2.72%
1969-1 0.24% 0.19% -0.23% 0.02% 0.40% 0.62%
1973-1 -0.54% -0.53% -1.47% 0.00% -0.56% -3.10%
 
1977-1 0.05% -0.32% -0.57% -0.49% -0.33% -1.65%
1981-1 0.22% -1.42% -0.32% -0.49% 0.71% -1.29%
1985-1 1.28% 0.75% 0.86% 0.60% 0.61% 4.10%
1989-1 -0.43% 0.51% 0.52% 0.78% 0.22% 1.60%
1993-1 0.76% 0.03% -1.31% -0.46% 0.24% -0.74%
Avg 0.38% -0.09% -0.16% -0.01% 0.29% 0.40%
 
1997-1 1.13% 0.93% 0.81% -0.70% -1.06% 1.11%
2001-1 -0.45% 2.99% 0.66% -3.67% 0.98% 0.51%
2005-1 -1.26% 0.56% 1.29% 0.05% -0.55% 0.10%
2009-1 0.00% -5.78% 4.60% -2.76% 0.81% -3.14%
2013-1 0.00% 0.27% 0.33% -0.74% 0.62% 0.48%
Avg -0.19% -0.21% 1.54% -1.56% 0.16% -0.19%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg 0.15% -0.11% 0.45% -0.59% 0.19% 0.10%
Win% 64% 69% 62% 42% 69% 62%
 
OTC summary for all years 1963 - 2016
Avg -0.19% -0.05% 0.23% 0.10% 0.02% 0.14%
Win% 52% 51% 58% 48% 68% 58%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.04% 0.50% -0.19% 0.11% -0.19% 0.19%
 
1957-1 -0.54% 0.29% 0.76% 0.36% -0.47% 0.41%
1961-1 0.55% 0.27% 0.13% 0.15% 1.02% 2.12%
1965-1 0.14% 0.09% 0.33% 0.29% 0.09% 0.94%
1969-1 -0.33% -0.06% 0.34% 0.44% -0.05% 0.34%
1973-1 -0.48% 0.01% -1.26% 0.00% -0.24% -1.97%
Avg -0.13% 0.12% 0.06% 0.31% 0.07% 0.37%
 
1977-1 -0.07% -0.12% -0.77% -0.54% 0.14% -1.35%
1981-1 -0.30% -2.02% -0.22% -0.84% -0.02% -3.40%
1985-1 2.28% 0.14% 1.04% -0.33% 0.36% 3.49%
1989-1 -0.74% 1.40% 0.23% 0.88% 0.73% 2.50%
1993-1 0.89% -0.01% -0.42% 0.13% 0.03% 0.62%
Avg 0.41% -0.12% -0.03% -0.14% 0.25% 0.37%
 
1997-1 0.07% 0.77% 0.45% -1.10% -0.91% -0.72%
2001-1 0.03% 1.30% 0.29% -0.50% -0.19% 0.93%
2005-1 -0.35% 0.40% 0.48% 0.04% -0.27% 0.30%
2009-1 0.00% -5.28% 4.35% -1.52% 0.54% -1.91%
2013-1 0.00% 0.44% 0.15% 0.00% 0.54% 1.14%
Avg -0.09% -0.47% 1.14% -0.61% -0.06% -0.05%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg 0.08% -0.12% 0.36% -0.16% 0.07% 0.23%
Win% 43% 69% 69% 60% 50% 69%
 
SPX summary for all years 1953 - 2016
Avg -0.13% 0.03% 0.19% 0.14% 0.00% 0.25%
Win% 51% 61% 58% 59% 54% 66%


Conclusion

All of the major indices declined slightly last week. New highs continued their decline and the secondaries underperformed the blue chips. The only data set that keeps me positive is new lows which have held steady at non-threatening levels.

I expect the major averages to be higher on Friday January 27 than they were on Friday January 20.

Last weeks positive forecast was a miss. All of the major indices were down a little.

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

Good Luck,

YTD W 1 / L 1 / T 1

 

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