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Technical Market Report for March 4, 2017

The good news is:
• All of the major averages hit all time highs last Wednesday.


The Negatives

The breadth indicators weakened a little over the past week.

The secondaries continue to under perform the blue chips.

After hitting an all time high on Wednesday the Russell 2000 (R2K) closed down for the week.

The first chart covers the past 6 months showing the NASDAQ composite (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 failed to confirm the new 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.

NY NH is a little stronger than OTC NH, but still failed to confirm the new index high by a wide margin.

SPX and NY NH

The next chart is from FastTrack (https://investorsfasttrack.com/). It covers the past year showing the R2K in red and the SPX in green on log scales. Accutrack (AT), plotted as a histogram at the bottom in yellow is a relative strength indicator. When AT is above the neutral line the R2K is outperforming the SPX and that is good.

Since late January the R2K has been underperforming the SPX; that is not good.

Russell 2000 versus SPX


The Positives

New highs have continued to outnumber new lows by wide 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 fell again last week, but, finished the week at a respectable 75%.

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 fell, finishing the week at a respectable 77%.

SPX and NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of March 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 by all measures.

Report for the week before the 2nd Friday of March.
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 -0.37% 0.10% -0.04% 0.17% 0.33% 0.19%
1969-1 0.44% 0.42% 0.73% 2.12% -2.07% 1.64%
1973-1 0.37% 1.13% 0.30% -0.14% -0.10% 1.56%
 
1977-1 0.10% 0.06% -0.50% 0.20% 0.14% 0.00%
1981-1 0.13% -0.55% -0.44% 1.27% 0.75% 1.15%
1985-1 -0.03% 0.01% -0.57% -0.79% -0.29% -1.68%
1989-1 0.56% -0.02% 0.05% -0.18% 0.06% 0.47%
1993-1 0.86% 0.25% 0.57% 0.20% -0.22% 1.67%
Avg 0.32% -0.05% -0.18% 0.14% 0.09% 0.32%
 
1997-1 0.78% -0.39% -0.96% -0.83% -0.02% -1.43%
2001-1 1.19% 2.87% 0.88% -2.48% -5.34% -2.88%
2005-1 0.95% -0.80% -0.59% -0.08% -0.88% -1.40%
2009-1 -1.95% 7.07% 0.98% 3.97% 0.38% 10.45%
2013-1 0.39% 1.32% -0.05% 0.30% 0.38% 2.34%
Avg 0.27% 2.01% 0.05% 0.18% -1.10% 1.42%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg 0.26% 0.88% 0.03% 0.29% -0.53% 0.93%
Win% 77% 69% 46% 54% 46% 69%
 
OTC summary for all years 1963 - 2016
Avg -0.05% 0.32% 0.03% 0.30% -0.05% 0.55%
Win% 46% 57% 61% 65% 52% 69%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.04% 0.31% 0.81% 0.04% 0.19% 1.31%
 
1957-1 0.73% 0.36% 0.25% -0.27% -0.32% 0.76%
1961-1 0.16% -0.91% -0.05% 0.09% -0.03% -0.73%
1965-1 0.03% -0.16% -0.17% 0.42% 0.36% 0.47%
1969-1 0.34% 0.33% -0.27% -0.67% -0.40% -0.66%
1973-1 0.36% 1.26% 0.31% -0.19% -0.39% 1.35%
Avg 0.32% 0.18% 0.01% -0.12% -0.15% 0.24%
 
1977-1 0.05% -0.38% -0.76% 0.57% -0.02% -0.54%
1981-1 0.98% -0.50% -0.39% 2.49% -0.06% 2.52%
1985-1 -0.64% 0.09% -0.87% -0.63% -0.23% -2.27%
1989-1 1.25% -0.32% 0.07% -0.05% -0.36% 0.59%
1993-1 1.93% -0.07% 0.42% -0.57% -0.86% 0.86%
Avg 0.71% -0.23% -0.31% 0.36% -0.30% 0.23%
 
1997-1 1.08% -0.28% -0.87% -1.83% 0.46% -1.45%
2001-1 0.59% 1.00% 0.65% 0.23% -2.48% -0.02%
2005-1 0.26% -0.48% -1.02% 0.19% -0.76% -1.81%
2009-1 -1.00% 6.37% 0.24% 4.07% 0.77% 10.46%
2013-1 0.46% 0.96% 0.11% 0.18% 0.45% 2.16%
Avg 0.28% 1.51% -0.18% 0.57% -0.31% 1.87%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg 0.41% 0.47% -0.10% 0.25% -0.23% 0.81%
Win% 81% 50% 50% 56% 31% 56%
 
SPX summary for all years 1953 - 2016
Avg -0.04% 0.19% 0.06% 0.18% -0.03% 0.36%
Win% 52% 55% 56% 62% 46% 59%


Conclusion

The breadth indicators continued to deteriorate in spite of new all time highs in the major indices. Seasonality remains positive for another week. This is a little reminiscent of March of 2000 when the market was defying common sense.

I expect the major averages to be higher on Friday March 10 than they were on Friday March 3.

Last week the R2K was down a little while all of the other major indices were up a little so I am calling last weeks positive forecast a tie. Same as last week.

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

Good Luck,

YTD W 2 / L 3 / T 4

 

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