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Market Sentiment At Its Lowest In 10 Months

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Stocks sold off last week…

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Technical Market Report for March 25, 2017

The good news is:
• Seasonality improves next week.


The Negatives

The breadth indicators deteriorated last week and the secondaries underperformed the blue chips.

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 turned downward last week.

OTC and OTC N

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 increased and new highs decreased last week; however, Wednesday was the only day that new lows outnumbered new highs.

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 took a dive last week, finishing the week at a modestly positive 58%.

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 took a dive last week ending Friday at a comfortable 66%.

SPX and NY HL Ratio


Seasonality

Next week includes the last 5 trading days 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 1928 to 2016. There are summaries for both the 1st year of the Presidential Cycle and all years combined.

Average returns for the coming week have been mixed, but a little stronger during the 1st year of the Presidential Cycle than average.

Report for the last 5 days of March.
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 1
  Day5 Day4 Day3 Day2 Day1 Totals
1965-1 0.08% 4 -0.14% 5 -0.33% 1 -0.02% 2 0.10% 3 -0.31%
1969-1 0.06% 1 -0.10% 2 -0.29% 3 0.15% 4 0.34% 5 0.16%
1973-1 0.06% 1 1.17% 2 0.21% 3 0.90% 4 -0.62% 5 1.72%
 
1977-1 -0.27% 5 -0.45% 1 0.07% 2 -0.73% 3 -0.11% 4 -1.48%
1981-1 0.78% 3 0.11% 4 -0.34% 5 0.07% 1 0.58% 2 1.19%
1985-1 -0.95% 1 -0.03% 2 0.50% 3 0.22% 4 0.37% 5 0.11%
1989-1 -0.09% 1 0.51% 2 0.27% 3 0.21% 4 0.54% 5 1.44%
1993-1 0.99% 4 0.08% 5 -0.11% 1 0.81% 2 0.57% 3 2.32%
Avg 0.09% 0.04% 0.08% 0.12% 0.39% 0.72%
 
1997-1 -0.92% 1 0.44% 2 1.68% 3 -1.54% 4 -2.22% 1 -2.56%
2001-1 -0.53% 1 2.80% 2 -5.99% 3 -1.81% 4 1.08% 5 -4.44%
2005-1 0.04% 4 0.07% 1 -0.94% 2 1.61% 3 -0.32% 4 0.47%
2009-1 0.82% 3 3.80% 4 -2.63% 5 -2.81% 1 1.78% 2 0.96%
2013-1 0.70% 5 -0.30% 1 0.53% 2 0.12% 3 0.34% 4 1.39%
Avg 0.02% 1.36% -1.47% -0.89% 0.13% -0.84%
 
OTC summary for Presidential Year 1 1965 - 2013
Averages 0.06% 0.61% -0.57% -0.22% 0.19% 0.07%
% Winners 62% 62% 46% 62% 69% 69%
MDD 3/29/2001 7.69% -- 3/30/2009 5.37% -- 3/31/1997 3.73%
 
OTC summary for all years 1963 - 2016
Averages 0.09% -0.02% -0.14% -0.05% 0.15% 0.01%
% Winners 56% 44% 57% 59% 64% 56%
MDD 3/30/2000 10.18% -- 3/27/1980 7.82% -- 3/29/2001 7.69%
 
SPX Presidential Year 1
  Day5 Day4 Day3 Day2 Day1 Totals
1929-1 -1.33% 6 -2.78% 1 -0.65% 2 3.04% 3 1.75% 4 0.03%
1933-1 -2.09% 1 1.97% 2 -2.25% 3 -0.33% 4 -3.31% 5 -6.01%
 
1937-1 -0.11% 4 0.40% 6 -0.68% 1 1.82% 2 -0.17% 3 1.25%
1941-1 -0.30% 3 0.81% 4 -0.70% 5 -0.20% 6 0.40% 1 0.01%
1945-1 -1.69% 1 0.60% 2 0.82% 3 0.22% 4 0.22% 6 0.17%
1949-1 0.00% 6 0.27% 1 1.94% 2 -0.07% 3 -0.99% 4 1.16%
1953-1 -0.27% 3 -0.57% 4 0.15% 5 -1.46% 1 -1.25% 2 -3.40%
Avg -0.47% 0.30% 0.31% 0.06% -0.36% -0.16%
 
1957-1 -0.41% 1 0.07% 2 0.41% 3 0.20% 4 -0.16% 5 0.12%
1961-1 -0.17% 5 -0.11% 1 0.05% 2 0.85% 3 0.20% 4 0.82%
1965-1 -0.29% 4 -0.74% 5 -0.20% 1 0.20% 2 -0.05% 3 -1.07%
1969-1 -0.13% 1 0.16% 2 0.73% 3 0.71% 4 0.41% 5 1.88%
1973-1 0.88% 1 1.57% 2 0.05% 3 0.98% 4 -1.06% 5 2.42%
Avg -0.02% 0.19% 0.21% 0.59% -0.13% 0.83%
 
1977-1 -0.64% 5 -0.06% 1 0.70% 2 -1.15% 3 -0.12% 4 -1.28%
1981-1 1.81% 3 -0.61% 4 -1.19% 5 -0.27% 1 1.28% 2 1.02%
1985-1 -0.60% 1 0.26% 2 0.62% 3 0.00% 4 0.62% 5 0.91%
1989-1 0.55% 1 0.35% 2 0.26% 3 0.06% 4 0.80% 5 2.02%
1993-1 0.63% 4 -0.69% 5 0.67% 1 0.27% 2 -0.07% 3 0.81%
Avg 0.35% -0.15% 0.21% -0.22% 0.50% 0.69%
 
1997-1 0.86% 1 -0.23% 2 0.18% 3 -2.10% 4 -2.17% 1 -3.45%
2001-1 1.13% 1 2.56% 2 -2.44% 3 -0.46% 4 1.08% 5 1.86%
2005-1 -0.09% 4 0.24% 1 -0.76% 2 1.38% 3 -0.07% 4 0.70%
2009-1 5.18% 3 2.33% 4 -2.03% 5 -3.48% 1 1.31% 2 3.31%
2013-1 0.72% 5 -0.33% 1 0.78% 2 -0.06% 3 0.41% 4 1.51%
Avg 1.56% 0.91% -0.86% -0.95% 0.11% 0.78%
 
SPX summary for Presidential Year 1 1929 - 2013
Averages 0.17% 0.25% -0.16% 0.01% -0.04% 0.22%
% Winners 36% 59% 59% 50% 50% 77%
MDD 3/31/1933 5.95% -- 3/30/2009 5.44% -- 3/26/1929 4.70%
 
SPX summary for all years 1928 - 2016
Averages -0.01% -0.03% -0.04% -0.02% -0.13% -0.23%
% Winners 38% 47% 53% 46% 43% 53%
MDD 3/31/1938 9.09% -- 3/31/1939 8.80% -- 3/31/1932 7.00%


Conclusion

The market had a rough week, but seasonality is improving.

I expect the major averages to be higher on Friday March 31 than they were on Friday March 24.

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

Good Luck,

YTD W 3 / L 5 / T 4

 

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