Technical Market Report for April 5, 2014

By: Mike Burk | Sat, Apr 5, 2014
Print Email

The good news is:
• The blue chip indices hit all time highs in the past week.


The negatives

In the past week the S&P 500 (SPX) closed at an all time high and the Dow Jones Industrial Average (DJIA) missed its all time high by just 3 points. The Russell 2000 (R2K), representing the secondaries missed its all time high by 1.3%. The index highs were not confirmed by the number of new highs on any exchange.

The chart below 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 is near its low for the past 6 months.

OTC NH

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

NY NH was a little stronger than OTC NH last week, but was closer to its low for the past 6 months than its high.

NY NH

The next chart covers the past month showing all of the major indices and the S&P mid cap index.

The secondaries lead both up and down and for the past month they have been heading down.

major indices and the S&P mid cap index


The positives

The number of new lows remains minimal.

The chart below 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 neutral 50% level.

OTC HL Ratio recovered to 71% last week.

OTC HL Ratio

The next chart is similar to the one above except it shows the SPX in red and NY HL Ratio, in blue, has been calculated from NYSE data.

What, me worry?

NY HL Ratio rose to an extremely strong 94% on Friday.

NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of April during the 2nd year of the Presidential Cycle.

The tables below show the daily return for the 5 trading days prior to the 2nd Friday of April during the 2nd year of the Presidential Cycle.

OTC data covers the period from 1963 - 2013 while SPX data runs from 1953 - 2013. There are summaries for both the 2nd 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.

Good Friday is a market holiday that usually falls in April. The program generating the tables below counts Fridays when the market is open so that will cause an increasing number of errors as April progresses. The April charts shown in the March 29 report do not suffer from that same shortcoming. So, for a more accurate rendition of April’s history, refer to those charts.

Returns for the coming week have been positive by most measures.

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 2
Year Mon Tue Wed Thur Fri Totals
1966-2 0.30% 0.20% -0.33% 0.10% 0.32% 0.59%
1970-2 -0.27% -0.23% -1.39% -0.40% -0.31% -2.60%
 
1974-2 -0.41% 1.02% 0.43% 0.20% -0.65% 0.59%
1978-2 0.28% -0.08% 0.40% 1.03% 1.18% 2.80%
1982-2 -0.14% -0.07% -0.19% 0.39% 0.62% 0.61%
1986-2 -0.68% 1.14% 0.07% 0.80% 0.46% 1.79%
1990-2 0.09% -0.29% -0.90% -0.58% -0.75% -2.43%
Avg -0.17% 0.34% -0.04% 0.37% 0.17% 0.67%
 
1994-2 -0.08% -1.19% -1.60% -0.01% 0.09% -2.79%
1998-2 0.26% 0.99% 1.10% -0.27% 0.45% 2.53%
2002-2 0.89% -2.42% 1.41% -2.37% 1.79% -0.70%
2006-2 -0.64% 1.95% 0.63% -0.35% -0.83% 0.74%
2010-2 0.16% 0.33% 1.58% 0.43% -1.37% 1.13%
Avg 0.12% -0.07% 0.62% -0.51% 0.03% 0.18%
 
OTC summary for Presidential Year 2 1966 - 2010
Avg -0.02% 0.11% 0.10% -0.09% 0.08% 0.19%
Win% 50% 50% 58% 50% 58% 67%
 
OTC summary for all years 1963 - 2013
Avg 0.01% -0.03% -0.05% 0.20% -0.26% -0.14%
Win% 61% 55% 55% 57% 53% 61%
 
SPX Presidential Year 2
Year Mon Tue Wed Thur Fri Totals
1954-2 0.18% -0.92% 0.37% 1.00% 0.73% 1.36%
1958-2 0.62% 1.02% -0.78% 0.36% 1.09% 2.31%
1962-2 -0.77% 0.37% -0.22% -1.02% 0.28% -1.37%
1966-2 0.03% -0.37% 0.10% 0.36% 0.13% 0.25%
1970-2 -0.70% -0.27% -0.03% 0.05% -0.33% -1.29%
Avg -0.13% -0.03% -0.11% 0.15% 0.38% 0.25%
 
1974-2 -0.08% 1.75% 0.75% 0.45% -1.09% 1.78%
1978-2 0.35% -0.27% -0.16% 0.97% 2.13% 3.03%
1982-2 -0.19% -0.01% -0.14% 0.45% 0.40% 0.51%
1986-2 -0.03% 2.14% 0.10% 1.15% -0.20% 3.16%
1990-2 0.12% -0.02% -1.15% -0.77% -0.88% -2.70%
Avg 0.04% 0.72% -0.12% 0.45% 0.07% 1.16%
 
1994-2 0.62% -0.51% -0.29% 0.03% -0.04% -0.20%
1998-2 -0.09% 0.54% 0.32% -0.99% 1.31% 1.09%
2002-2 0.23% -0.67% 1.13% -2.37% 0.66% -1.01%
2006-2 -0.29% 1.74% 0.17% 0.12% -0.01% 1.72%
2010-2 0.18% 0.07% 1.12% 0.08% -1.61% -0.17%
Avg 0.13% 0.23% 0.49% -0.63% 0.06% 0.29%
 
SPX summary for Presidential Year 2 1954 - 2010
Avg 0.01% 0.31% 0.09% -0.01% 0.17% 0.57%
Win% 53% 47% 53% 73% 53% 60%
 
SPX summary for all years 1953 - 2013
Avg 0.16% 0.09% 0.05% 0.01% -0.08% 0.24%
Win% 62% 56% 56% 54% 52% 57%


Money Supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth has been on trend for the past few weeks.

M2 Money Supply versus S&P500 Daily Chart


Conclusion

The market has been following the seasonal pattern quite closely and that pattern calls for a top around the 3rd week of April. New highs have been deteriorating for months while other breadth indicators began deteriorating about a month ago. There is every reason to expect the seasonal pattern to play out as it has in the past.

I expect the major averages to be higher on Friday April 11 than they were on Friday April 4.

Last week the OTC was down while all the other major indices were up so I am calling last weeks positive forecast a tie.

This report is free to anyone who wants it, so please tell your friends. They can sign up at: http://www.stockmarket-ta.com/signup.html. If it is not for you, reply with REMOVE in the subject line.

Gordon Harms produces a Power Point for our local timing group meetings. You can get a copy of it at: http://www.stockmarket-ta.com/

I no longer have any affiliation with Alpha Investment Management so these reports will be coming from mikeburk@stockmarket-ta.com for the foreseeable future.

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

Good Luck,

YTD W 4/L 4/T 6

 


 

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.

Copyright © 2003-2014 Mike Burk

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/