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Technical Market Report for May 13, 2017

The good news is:
• Both the NASDAQ composite (OTC) and the S&P 500 (SPX) closed at all time highs during last Week.


The Negatives

New lows continued to dance around threatening levels last week and the secondaries continued 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 non confirmation of new index highs.

OTC and OTC NH

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

The deterioration of NY NH is more dramatic than that of OTC NH.

SPX and NY NH


The Positives

New highs easily outnumbered new lows all week.

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 a little finishing the week at 66%.

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 with NYSE data.

NY HL Ratio also fell, but finished the week at a strong 71%.

SPX and NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of May 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 mixed, but stronger during the 1st year of the Presidential Cycle than average.

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

OTC Presidential Year 1
YearMonTueWedThurFriTotals
1965-1-0.06%-0.35%-0.21%-0.23%-0.45%-1.31%
1969-10.18%-0.67%0.36%0.78%0.36%1.01%
1973-1-2.42%-0.30%-0.04%-0.86%-2.19%-5.80%
 
1977-10.39%0.11%0.58%-0.11%-0.37%0.61%
1981-1-0.95%0.16%0.31%0.65%0.62%0.78%
1985-10.24%-0.15%0.21%0.49%0.67%1.47%
1989-10.32%-0.13%0.66%0.29%0.51%1.65%
1993-10.24%0.42%1.42%1.01%-0.45%2.63%
Avg0.04%0.08%0.64%0.47%0.20%1.43%
 
1997-10.68%-0.79%0.15%1.35%-0.95%0.44%
2001-1-1.21%0.18%3.87%1.26%0.24%4.34%
2005-10.89%0.49%1.32%0.59%0.19%3.48%
2009-1-0.45%-0.88%-3.01%1.50%-0.54%-3.38%
2013-10.06%0.69%0.26%-0.18%0.97%1.81%
Avg0.00%-0.06%0.52%0.90%-0.02%1.34%
 
OTC summary for Presidential Year 1 1965 - 2013
Avg-0.16%-0.09%0.45%0.50%-0.11%0.59%
Win%62%46%77%69%54%77%
 
OTC summary for all years 1963 - 2016
Avg-0.01%-0.01%0.03%-0.03%-0.18%-0.19%
Win%48%44%59%50%43%50%
 
SPX Presidential Year 1
YearMonTueWedThurFriTotals
1953-1-0.20%-0.68%-0.04%0.49%-0.04%-0.48%
 
1957-10.62%-0.45%0.34%0.41%0.28%1.20%
1961-10.57%0.37%0.46%-0.59%0.42%1.23%
1965-1-0.62%-0.09%0.23%-0.55%-0.48%-1.50%
1969-1-0.15%0.43%0.78%-0.29%0.09%0.85%
1973-1-2.10%0.63%-0.13%-0.82%-1.61%-4.03%
Avg-0.34%0.18%0.34%-0.37%-0.26%-0.45%
 
1977-10.44%0.30%0.53%-0.42%-0.43%0.43%
1981-1-1.48%0.78%-0.13%0.56%0.68%0.40%
1985-10.18%-0.40%0.36%0.61%0.95%1.70%
1989-10.74%-0.28%0.70%0.15%1.03%2.34%
1993-10.18%-0.01%1.64%0.69%-1.05%1.44%
Avg0.01%0.08%0.62%0.32%0.23%1.26%
 
1997-11.56%-0.54%0.35%0.70%-1.44%0.63%
2001-10.26%0.04%2.85%0.27%0.27%3.69%
2005-11.01%0.70%1.00%0.47%-0.15%3.02%
2009-1-2.15%-0.10%-2.69%1.04%-1.14%-5.04%
2013-10.00%1.01%0.51%-0.50%1.03%2.06%
Avg0.14%0.22%0.40%0.39%-0.29%0.87%
 
SPX summary for Presidential Year 1 1953 - 2013
Avg-0.07%0.11%0.42%0.14%-0.10%0.50%
Win%63%50%75%63%50%75%
 
SPX summary for all years 1953 - 2016
Avg-0.03%0.05%0.05%-0.07%-0.10%-0.09%
Win%51%52%50%50%52%50%


Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms. M2 is continuing its climb in spite of expired QE and rising rates.

S&P500 and M2 Money Supply

Interest rates continued to hold steady.

Yield Curve


Conclusion

Same as last week, market breadth indicators continued to deteriorate, new highs decreased, new lows increased and the secondaries underperformed the blue chips.

I expect the major averages to be lower on Friday May 19 than they were on Friday May 12.

Last week the OTC was up while everything else was down so I am calling last weeks negative forecast a tie.

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

Good Luck,

YTD W 6 / L 7 / T 6

 

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