Technical Market Report

By: Mike Burk | Sat, Feb 19, 2005
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The good news is:
 • During the past week there were very few new lows on the NYSE and only a modest number of new lows on the NASDAQ.

It is difficult to find any signs of direction this week.

Summation indices (SI) are running totals of oscillator values. When the oscillator is above 0 its SI rises when it is below 0 its SI falls. The next 4 charts below show SI's calculated from advancing - declining issues (AD), new highs - new lows (HL) and upside - downside volume (UD).

The first chart shows the NASDAQ composite (OTC) with SI's calculated from reported NASDAQ data. The SI's have been flat for over a week and as of last Friday are all heading slightly downward.

The next 3 charts show SI's calculated from the component issues of the indexes showing on the charts. There is another indicator called Net Field Trend (NFT) show in blue on each of the charts. NFT is calculated by looking at the most recent two tops and bottoms of On Balance Volume (OBV). If the two tops and two bottoms have been progressively higher the trend is positive if they are progressively lower the trend is negative. If neither of those patterns can be identified the trend is neutral. NFT is the total of all issues in the index with negative trends subtracted from all issues in the index with positive trends. The horizontal dashed line on the chart is 0.

The chart below shows the S&P 500 (SPX) with indicators calculated from its component issues. One SI is moving upward while two SI's are moving downward and NFT is slightly negative.

The next chart shows the S&P Mid cap index (MID) with indicators calculated from its component issues. One SI is moving downward while the other two are moving upward and NFT is slightly positive.

The next chart shows the Russell 2000 index (R2K) with indicators calculated from its component issues. One SI is moving upward while the other two are moving downward and NFT is slightly negative.

The chart bellows shows the OTC and the NASDAQ new high indicator (NH). NH is a 10% trend (19 day EMA) of NASDAQ new highs. NH usually gives a good clue as to the direction of the market, it has been flat.

Performance of the small caps relative to the large caps usually offers a clue as to the direction of the market (small caps lead). The chart below shows the R2K in red, the SPX in green an a FastTrack relative strength indicator called Accutrack as a histogram in yellow. Accutrack as been flat near its neutral line for the past week or so.

The tables below show the last 5 trading days of February during the 1st year of the presidential cycle for the OTC and SPX with summary data for all years.

NASDAQ data covers the period from 1963 to 2004 while SPX data covers the period from 1928 to 2004. The 1st presidential year is broken into 5 period groups to help identify longer term trends.

The NASDAQ over all years has been slightly positive for the period while the 1st years of the presidential cycle have been very negative.

The SPX has been flat any way you look at it.

Last 5 days of February.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.
Presidential Year 1
OTC Day5 Day4 Day3 Day2 Day1 Totals
1965-1 0.21% 5 0.61% 2 0.93% 3 0.54% 4 -0.15% 5 2.15%
1969-1 -1.88% 1 -0.74% 2 -0.90% 3 0.53% 4 -0.82% 5 -3.82%
1973-1 -0.22% 4 -1.08% 5 -0.87% 1 -1.21% 2 0.51% 3 -2.88%
1977-1 -0.25% 2 -0.40% 3 -0.96% 4 0.06% 5 -0.35% 1 -1.89%
1981-1 0.40% 1 0.46% 2 0.03% 3 1.10% 4 0.96% 5 2.94%
Average -0.35% -0.23% -0.36% 0.20% 0.03% -0.70%
 
1985-1 -0.28% 5 -0.78% 1 0.37% 2 -0.31% 3 0.02% 4 -0.98%
1989-1 -0.96% 3 0.14% 4 -0.77% 5 -0.26% 1 0.19% 2 -1.65%
1993-1 -1.69% 1 -0.16% 2 1.70% 3 0.70% 4 0.55% 5 1.11%
1997-1 0.81% 1 0.19% 2 -0.53% 3 -2.08% 4 -0.28% 5 -1.89%
2001-1 -1.05% 4 0.78% 5 2.03% 1 -4.36% 2 -2.54% 3 -5.14%
Average -0.63% 0.04% 0.56% -1.26% -0.41% -1.71%
 
Averages -0.49% -0.10% 0.10% -0.53% -0.19% -1.20%
% Winners 30% 50% 50% 50% 50% 30%
MDD 2/28/2001 6.79% -- 2/28/1969 3.77% -- 2/27/1973 3.35%
 
All years 1963 - 2004
Averages -0.04% 0.12% 0.10% -0.06% 0.02% 0.14%
% Winners 52% 57% 52% 60% 52% 57%
MDD 2/28/2001 6.79% -- 2/28/1969 3.77% -- 2/26/1999 3.68%
 
Presidential Year 1
SPX Day5 Day4 Day3 Day2 Day1 Totals
1929-1 1.10% 4 0.20% 1 0.16% 2 1.20% 3 1.35% 4 4.01%
1933-1 -4.70% 4 3.87% 5 -2.00% 6 -1.07% 1 2.35% 2 -1.55%
1937-1 -2.12% 2 0.56% 3 -0.39% 4 0.33% 5 0.17% 6 -1.46%
1941-1 0.82% 1 0.91% 2 0.20% 3 -0.70% 4 0.40% 5 1.64%
 
1945-1 -0.21% 5 -0.28% 6 -0.21% 1 0.78% 2 0.70% 3 0.78%
1949-1 -0.95% 3 -1.23% 4 -0.28% 5 0.49% 6 1.18% 1 -0.80%
1953-1 0.23% 5 0.47% 2 0.62% 3 0.15% 4 -0.19% 5 1.29%
1957-1 -0.34% 4 -0.23% 1 0.16% 2 -0.09% 3 -0.35% 4 -0.85%
1961-1 0.06% 2 0.37% 4 0.40% 5 0.73% 1 0.22% 2 1.79%
Average -0.24% -0.18% 0.14% 0.41% 0.31% 0.44%
 
Best 5 periods
1965-1 0.19% 5 0.50% 2 0.61% 3 0.03% 4 0.26% 5 1.59%
1969-1 -1.19% 1 -0.63% 2 0.48% 3 -0.31% 4 -0.01% 5 -1.67%
1973-1 -0.22% 4 -1.12% 5 -0.86% 1 -1.15% 2 0.70% 3 -2.64%
1977-1 0.00% 2 -0.30% 3 -0.59% 4 -0.12% 5 0.34% 1 -0.67%
1981-1 0.61% 1 0.03% 2 0.89% 3 1.23% 4 0.90% 5 3.66%
Average -0.12% -0.30% 0.11% -0.06% 0.44% 0.06%
 
1985-1 -0.46% 5 -0.07% 1 1.08% 2 -0.25% 3 0.26% 4 0.56%
1989-1 -1.71% 3 0.39% 4 -1.68% 5 0.24% 1 0.36% 2 -2.40%
1993-1 0.23% 1 -0.10% 2 1.40% 3 0.33% 4 0.24% 5 2.10%
1997-1 1.06% 1 0.21% 2 -0.78% 3 -1.32% 4 -0.54% 5 -1.35%
2001-1 -0.20% 4 -0.56% 5 1.75% 1 -0.77% 2 -1.43% 3 -1.20%
Average -0.21% -0.02% 0.35% -0.35% -0.22% -0.46%
 
Averages -0.41% 0.16% 0.05% -0.01% 0.36% 0.15%
% Winners 42% 53% 58% 53% 74% 47%
MDD 2/23/1933 4.70% -- 2/27/1973 3.30% -- 2/24/1989 2.99%
 
All years 1928 - 2004
Averages -0.17% -0.10% 0.10% 0.01% 0.13% -0.02%
% Winners 47% 42% 53% 55% 59% 49%
MDD 2/26/1934 6.47% -- 2/26/1946 5.14% -- 2/23/1933 4.70%

Except for natural resource issues which are very strong, the market is offering few short term clues. My forecast for next week is nothing but a guess.

I expect the major indices to be lower on Friday February 25 than they were on Friday February 18

Last week I pointed out the unusual seasonal characteristics of the week before the Presidents day holiday. The market did the opposite. Monday and Tuesday which usually have had a weak bias were strong, Wednesday and Thursday usually have had a very strong bias were very weak and Friday which has usually been weak was mixed.

For the week, NYSE composite was up while the rest of the major indices were down, but, the movement in all of the major indices was less than 1% so I am calling last weeks positive forecast a tie.


 

Author: Mike Burk

Mike Burk

Mike Burk independently publishes a weekly newsletter on the stock market from a technical perspective.

Charts and figures presented herein are believed to be reliable but we cannot attest to their accuracy. Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus (qp2.com) and the Wall Street Journal (wsj.com). Historical data is from Barron's and ISI price books. The views expressed are provided for information purposes only and should not be construed in any way as investment advice. Furthermore, the opinions expressed may change without notice.

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