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Technical Market Report for February 11, 2017

The good news is:
• All of the major indices closed at all time highs on Friday


The Negatives

New highs again failed to confirm the index highs.

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 turned up a little, but failed to confirm the index high by a wide margin.

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.

The pattern is similar to the chart above.

SPX and NY NH


The Positives

New lows remained minimal.

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 very strong 85%.

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 also rose, finishing the week at a very strong 92%.

SPX and NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of February 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 2016 while SPX data runs from 1953 to 2016. 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 over all years, but weak during the 1st year of the Presidential Cycle.

Report for the week before the 3rd Friday of February.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 0.43% -0.25% -0.40% 0.79% 0.21% 0.77%
1969-1 -1.88% -0.74% -0.90% 0.53% -0.82% -3.82%
1973-1 1.52% 1.06% -1.39% -0.79% 0.10% 0.50%
 
1977-1 0.04% 0.29% 0.22% -0.06% -0.19% 0.30%
1981-1 0.00% 0.05% 0.39% -1.02% -0.23% -0.82%
1985-1 -0.32% -0.30% 0.61% 0.01% -0.22% -0.22%
1989-1 -0.27% 0.19% 0.67% 0.24% 0.37% 1.19%
1993-1 0.00% -3.64% -0.90% 0.46% 0.18% -3.90%
Avg -0.18% -0.68% 0.20% -0.07% -0.02% -0.69%
 
1997-1 0.00% 0.00% -0.12% -1.33% -0.97% -2.42%
2001-1 0.76% -2.49% 2.62% 2.47% -4.99% -1.64%
2005-1 0.30% 0.30% -0.09% -1.25% -0.13% -0.86%
2009-1 0.00% -4.15% -0.18% -1.71% -0.11% -6.16%
2013-1 -0.06% -0.17% 0.33% 0.06% -0.21% -0.06%
Avg 0.33% -1.63% 0.51% -0.35% -1.28% -2.23%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg 0.06% -0.82% 0.07% -0.12% -0.54% -1.32%
Win% 56% 42% 46% 54% 31% 31%
 
OTC summary for all years 1963 - 2016
Avg 0.08% -0.08% 0.09% 0.16% -0.13% 0.09%
Win% 58% 49% 57% 63% 48% 59%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.35% -0.58% -0.08% 0.35% 0.23% -0.43%
 
1957-1 -1.73% -0.42% 1.53% -0.12% 1.21% 0.47%
1961-1 -0.59% 0.44% 0.83% 0.61% -0.32% 0.98%
1965-1 -0.12% -0.46% 0.12% 0.33% 0.19% 0.05%
1969-1 -1.19% -0.63% 0.48% -0.31% -0.01% -1.67%
1973-1 1.20% 0.62% -1.44% -0.56% 0.46% 0.28%
Avg -0.48% -0.09% 0.30% -0.01% 0.31% 0.02%
 
1977-1 0.52% 0.30% 0.46% -0.57% -0.43% 0.27%
1981-1 0.00% 0.65% 0.52% -1.46% -0.02% -0.30%
1985-1 -0.92% 0.03% 1.55% -0.51% -0.44% -0.31%
1989-1 0.18% -0.25% 0.83% 0.19% 0.66% 1.62%
1993-1 0.00% -2.40% -0.14% -0.32% 0.54% -2.33%
Avg -0.08% -0.33% 0.64% -0.53% 0.06% -0.21%
 
1997-1 0.00% 0.97% -0.47% -1.19% -0.13% -0.82%
2001-1 1.18% -0.87% -0.22% 0.81% -1.89% -0.98%
2005-1 0.07% 0.33% 0.02% -0.79% 0.07% -0.30%
2009-1 0.00% -4.56% -0.10% 0.07% -2.39% -6.98%
2013-1 -0.06% 0.16% 0.06% 0.07% -0.10% 0.12%
Avg 0.40% -0.79% -0.14% -0.21% -0.89% -1.79%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg -0.15% -0.42% 0.25% -0.21% -0.15% -0.64%
Win% 42% 50% 63% 44% 44% 44%
 
SPX summary for all years 1953 - 2016
Avg 0.06% -0.02% 0.19% -0.01% 0.00% 0.20%
Win% 47% 56% 58% 50% 47% 59%


Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms. M2 growth leveled off at its elevated trend last month.

SPX and M2 Money Supply

Interest rates have leveled off after their moon shot the previous month.

SPX and Yield Curve


Conclusion

The breadth indicators were strong last week.

The secondaries hit a new all time high, but continued to under perform the blue chips.

Seasonality for the next few weeks remains negative.

I expect the major averages to be lower on Friday February 17 than they were on Friday February 10.

Last weeks negative forecast was a miss.

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

Good Luck,

YTD W 2 / L 2 / T 2

 

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