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Technical Market Report for April 8, 2017

The good news is:
• Seasonality, next week has been very strong.


The Negatives

New highs continued to deteriorate and the secondaries continue to under perform the blue chips.

The first chart 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 its decline.

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 next chart is from FastTrack (investorsfasttrack.com). It covers the past year showing the Russell 2000 (R2K) in red, the SPX in green and a relative strength indicator called Accutrack as a histogram on the bottom in yellow.

When Accutrack is above the neutral line the R2K is outperforming the SPX. That is good. This chart shows the R2K underperforming the SPX for the past 3 months.

Accutrack Total Return


The Positives

New lows increased last week, but remain at non threatening levels.

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 tumbled last week but remained above the neutral line.

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 fell a bit last week, but finished the week at a very strong 81%.

SPX and NY HL Ratio


Seasonality

Next week includes the 4 trading days prior to Good Friday and the 4 trading days prior to the 2nd Friday of April during the 1st year of the Presidential Cycle. Good Friday moves around a lot so the tables below show the daily change, on a percentage basis for the 5 trading days prior to the 2nd Friday of April.

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 mixed, but much stronger during the 1st year of the Presidential Cycle than average.

Report for the week before the 2nd Friday of April.
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% 0.18% 0.16% 0.55% 0.57% 1.84%
1969-1 0.29% -0.21% -0.53% -0.70% 0.15% -1.00%
1973-1 0.65% 0.70% 0.42% 0.26% -0.32% 1.71%
 
1977-1 0.36% 0.73% 0.04% 0.95% 0.27% 2.35%
1981-1 -0.65% 0.23% 0.49% 0.52% 0.58% 1.18%
1985-1 0.16% 0.43% 0.37% -0.08% -0.11% 0.78%
1989-1 0.10% 0.58% 0.52% -0.44% 0.92% 1.69%
1993-1 1.02% 0.11% 0.02% -0.54% -0.53% 0.08%
Avg 0.20% 0.42% 0.29% 0.08% 0.23% 1.21%
 
1997-1 1.19% 0.48% -0.64% -1.09% -2.34% -2.40%
2001-1 -2.64% 0.71% 8.12% 4.94% -0.86% 10.28%
2005-1 0.32% 0.41% -0.01% 0.98% -0.96% 0.74%
2009-1 0.05% -1.67% 0.07% 2.68% 0.16% 1.28%
2013-1 0.57% 0.48% 1.83% 0.09% -0.16% 2.82%
Avg -0.10% 0.08% 1.88% 1.52% -0.83% 2.55%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg 0.14% 0.25% 0.84% 0.63% -0.20% 1.64%
Win% 85% 85% 77% 62% 46% 85%
 
OTC summary for all years 1963 - 2016
Avg -0.02% -0.04% 0.02% 0.10% -0.30% -0.24%
Win% 57% 54% 57% 54% 52% 57%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.20% 0.36% 0.40% -0.20% -1.16% -0.80%
 
1957-1 -0.22% 0.90% 0.42% -0.09% 0.22% 1.23%
1961-1 0.86% 0.14% -0.47% -0.08% 0.17% 0.62%
1965-1 0.00% -0.03% 0.06% 0.57% 0.60% 1.19%
1969-1 -0.08% -0.04% -0.89% 0.15% 0.46% -0.40%
1973-1 1.45% 1.22% 0.42% -0.09% -0.44% 2.55%
Avg 0.50% 0.44% -0.09% 0.09% 0.20% 1.04%
 
1977-1 0.64% 1.28% 0.01% 0.84% 0.04% 2.81%
1981-1 -1.15% -0.01% 0.75% -0.18% -0.12% -0.72%
1985-1 0.21% 0.15% 0.26% -0.46% 0.15% 0.32%
1989-1 -0.02% 0.46% 0.17% -0.87% 1.67% 1.42%
1993-1 1.48% 0.19% -0.12% -0.06% 0.12% 1.61%
Avg 0.23% 0.42% 0.21% -0.15% 0.37% 1.09%
 
1997-1 0.56% 0.52% -0.72% -0.30% -2.73% -2.66%
2001-1 -0.32% 1.03% 3.89% 1.26% -0.86% 4.99%
2005-1 0.27% 0.45% 0.23% 0.60% -0.83% 0.71%
2009-1 0.25% -2.01% 1.25% 1.55% 0.50% 1.55%
2013-1 0.63% 0.35% 1.22% 0.36% -0.28% 2.28%
Avg 0.28% 0.07% 1.17% 0.69% -0.84% 1.37%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg 0.29% 0.31% 0.43% 0.19% -0.16% 1.04%
Win% 60% 75% 75% 44% 56% 75%
 
SPX summary for all years 1953 - 2016
Avg 0.13% 0.08% 0.09% -0.04% -0.11% 0.15%
Win% 59% 56% 58% 52% 52% 55%


Conclusion

The breadth indicators have been deteriorating for several months and something has to give (either the breadth indicators improve or the indices fall). New lows have remained benign and Seasonality for next week is very strong.

I expect the major averages to be higher on Thursday April 14 than they were on Friday April 1.

Last weeks positive forecast was a miss.

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

Good Luck,

YTD W 4 / L 6 / T 4

 

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