Technical Market Report for April 19, 2014

By: Mike Burk | Sat, Apr 19, 2014
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The good news is:
• The market was up every day last week bring the blue chip indices very close to their all time highs.


The negatives

Last week the blue chips rallied to very near their all time highs while the secondaries came up significantly short of their recent highs. The breadth indicators continued to deteriorate.

The chart below covers the past year 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 at its lowest level in over a year.

OTC NH Chart

The next chart is similar to the one above except is shows S&P 500 (SPX) in red and NY NH, in green, has been calculated from NYSE data.

Last weeks 4 day rally barely arrested the decline in NY NH.

NY NH Chart

The next chart shows 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 a little with last weeks rally, but remains below the neutral level.

OTC HL Ratio Chart

The next chart shows the OTC in blue and a 5% trend (39 day EMA) of NASDAQ downside volume (OTC DV) in red.

OTC DV has been plotted on an inverted Y axis so decreasing downside volume moves the indicator upward (up is good).

OTC DV bounced off its lowest point in over a year last week.

OTC DV Chart

The next chart shows the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in red.

Like the OTC DV above OTC NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward.

Last week OTC NL hit its lowest point in over a year.

OTC NL Chart


The positives

Breadth has been better on the NYSE than the NASDAQ.

By the end of last week NYSE new lows had declined to benign levels.

The chart below shows the SPX, in red, and a 40% trend of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.

NY HL Ratio rallied to a comfortable 75%.

NY HL Ratio Chart


Seasonality

Next week includes the 5 trading days prior to the 4th Friday of April during the 2nd year of the Presidential Cycle.

Good Friday messes up the Friday count in April so the tables show the last 8 trading days of April to eliminate the errors created by counting Friday's.

OTC data covers the period from 1963 - 2013 while SPX data runs from 1928 - 2013. There are summaries for both the 2nd year of the Presidential Cycle and all years combined.

Average returns for the last 8 trading days of April have been much weaker during the 2nd year of the Presidential Cycle than other years.

Report for the last 8 days of April.
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 2
  Day8 Day7 Day6 Day5 Day4 Day3 Day2 Day1 Totals
1966-2 -0.45% 3 0.57% 4 0.20% 5 0.25% 1 1.10% 2 0.03% 3 -0.81% 4 -0.07% 5 0.82%
1970-2 -1.70% 2 -1.37% 3 -1.55% 4 -2.78% 5 -0.49% 1 -2.01% 2 -2.66% 3 1.59% 4 -10.98%
 
1974-2 -0.65% 5 -0.04% 1 -1.99% 2 -1.72% 3 -1.05% 4 0.23% 5 0.26% 1 0.46% 2 -4.50%
1978-2 0.19% 3 1.09% 4 0.41% 5 0.25% 1 0.60% 2 0.37% 3 -0.10% 4 0.51% 5 3.32%
1982-2 0.21% 3 0.73% 4 0.69% 5 0.47% 1 -0.58% 2 0.09% 3 -0.40% 4 0.30% 5 1.51%
1986-2 0.20% 1 -0.24% 2 -0.25% 3 0.52% 4 0.21% 5 -0.23% 1 -0.57% 2 -1.53% 3 -1.89%
1990-2 -0.58% 4 -0.75% 5 -1.34% 1 -0.21% 2 0.33% 3 0.12% 4 -0.73% 5 0.50% 1 -2.67%
Avg -0.13% 0.16% -0.50% -0.14% -0.10% 0.12% -0.31% 0.05% -0.84%
 
1994-2 -1.05% 2 -1.03% 3 1.87% 4 0.53% 5 1.14% 1 0.47% 2 -0.34% 4 0.29% 5 1.88%
1998-2 0.89% 2 0.72% 3 -1.88% 4 -0.66% 5 -2.61% 1 0.63% 2 1.08% 3 0.91% 4 -0.92%
2002-2 -0.31% 5 -2.12% 1 -1.61% 2 -0.98% 3 0.02% 4 -2.91% 5 -0.42% 1 1.89% 2 -6.44%
2006-2 0.63% 3 -0.35% 4 -0.83% 5 -0.40% 1 -0.13% 2 0.14% 3 0.49% 4 -0.95% 5 -1.42%
2010-2 0.17% 3 0.58% 4 0.44% 5 -0.28% 1 -2.04% 2 0.01% 3 1.63% 4 -2.02% 5 -1.52%
Avg 0.06% -0.44% -0.40% -0.36% -0.72% -0.33% 0.49% 0.02% -1.69%
 
OTC summary for Presidential Year 2 1966 - 2010
Averages -0.20% -0.18% -0.49% -0.42% -0.29% -0.25% -0.22% 0.16% -1.90%
% Winners 50% 42% 42% 42% 50% 75% 33% 67% 33%
MDD 4/29/1970 11.92% -- 4/29/2002 8.07% -- 4/25/1974 5.35%
 
OTC summary for all years 1963 - 2013
Averages 0.28% 0.20% -0.11% -0.13% 0.03% 0.00% 0.21% 0.23% 0.71%
% Winners 57% 59% 57% 55% 49% 71% 67% 67% 63%
MDD 4/29/1970 11.92% -- 4/24/2000 8.20% -- 4/29/2002 8.07%
 
SPX Presidential Year 2
  Day8 Day7 Day6 Day5 Day4 Day3 Day2 Day1 Totals
1930-2 0.83% 2 0.20% 3 -0.78% 4 -0.12% 5 0.20% 6 -2.40% 1 -0.12% 2 0.69% 3 -1.52%
1934-2 -0.18% 6 -0.45% 1 -0.81% 2 -0.55% 3 -1.37% 4 0.09% 5 -0.83% 6 -2.33% 1 -6.43%
1938-2 2.85% 5 -0.77% 6 -1.54% 1 -2.45% 2 1.20% 3 -3.08% 4 0.10% 5 -0.82% 6 -4.49%
1942-2 -0.26% 3 -2.57% 4 -0.53% 5 0.26% 6 -0.40% 1 -0.93% 2 1.87% 3 0.66% 4 -1.88%
1946-2 -0.11% 1 -0.21% 2 -1.01% 3 -0.59% 4 0.22% 5 0.86% 6 -0.11% 1 0.21% 2 -0.73%
1950-2 0.17% 5 0.00% 6 -0.72% 1 0.00% 2 -0.39% 3 0.56% 4 0.56% 5 0.61% 6 0.79%
Avg 0.50% -0.80% -0.92% -0.66% -0.15% -0.50% 0.32% -0.33% -2.55%
 
1954-2 -0.40% 3 0.14% 4 0.36% 5 0.36% 1 -0.43% 2 0.00% 3 1.51% 4 0.28% 5 1.84%
1958-2 0.52% 1 -0.30% 2 0.00% 3 0.79% 4 0.51% 5 -0.32% 1 -0.51% 2 1.02% 3 1.71%
1962-2 0.54% 3 0.47% 4 -0.09% 1 -0.10% 2 -1.10% 3 -0.97% 4 -1.12% 5 -1.60% 1 -3.96%
1966-2 0.56% 3 0.37% 4 -0.16% 5 -0.21% 1 -0.10% 2 -0.25% 3 -0.69% 4 -0.08% 5 -0.55%
1970-2 -0.52% 2 -1.30% 3 -1.46% 4 -0.33% 5 -1.58% 1 -1.46% 2 1.92% 3 -0.35% 4 -5.09%
Avg 0.14% -0.12% -0.27% 0.10% -0.54% -0.60% 0.22% -0.14% -1.21%
 
1974-2 -1.09% 5 -0.39% 1 -1.68% 2 -1.64% 3 -0.81% 4 0.68% 5 -0.20% 1 0.34% 2 -4.79%
1978-2 0.46% 3 0.72% 4 -0.21% 5 1.52% 1 0.91% 2 0.19% 3 -0.99% 4 1.01% 5 3.60%
1982-2 0.24% 3 1.27% 4 1.24% 5 0.52% 1 -1.06% 2 -0.63% 3 -0.96% 4 0.27% 5 0.89%
1986-2 0.97% 1 -0.95% 2 -0.28% 3 0.11% 4 0.11% 5 0.33% 1 -1.06% 2 -2.07% 3 -2.83%
1990-2 -0.77% 4 -0.88% 5 -1.21% 1 -0.21% 2 0.51% 3 0.27% 4 -1.14% 5 0.51% 1 -2.93%
Avg -0.04% -0.05% -0.43% 0.06% -0.07% 0.17% -0.87% 0.01% -1.21%
 
1994-2 0.02% 2 -0.13% 3 1.53% 4 -0.25% 5 1.13% 1 -0.19% 2 -0.61% 4 0.40% 5 1.91%
1998-2 0.24% 2 0.33% 3 -0.92% 4 -1.05% 5 -1.93% 1 -0.13% 2 0.88% 3 1.57% 4 -1.01%
2002-2 0.06% 5 0.00% 1 -2.15% 2 -0.71% 3 -0.15% 4 -1.39% 5 -1.01% 1 1.08% 2 -4.27%
2006-2 0.17% 3 0.12% 4 -0.01% 5 -0.24% 1 -0.49% 2 0.28% 3 0.33% 4 0.07% 5 0.23%
2010-2 -0.10% 3 0.23% 4 0.71% 5 -0.43% 1 -2.34% 2 0.65% 3 1.29% 4 -1.66% 5 -1.66%
Avg 0.08% 0.11% -0.17% -0.53% -0.75% -0.16% 0.18% 0.29% -0.96%
 
SPX sumamry for Presidential Year 2 1930 - 2010
Averages 0.20% -0.20% -0.46% -0.25% -0.35% -0.37% -0.04% -0.01% -1.48%
% Winners 62% 43% 19% 29% 38% 43% 38% 67% 33%
MDD 4/30/1938 7.18% -- 4/28/1970 6.48% -- 4/30/1934 6.27%
 
SPX summary for all years 1928 - 2013
Averages 0.02% 0.08% -0.14% -0.20% 0.07% -0.10% -0.01% 0.26% -0.03%
% Winners 53% 55% 41% 48% 58% 51% 51% 59% 56%
MDD 4/29/1936 8.89% -- 4/28/1937 8.16% -- 4/29/1931 7.53%


Money Supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth continued to fall last week.

M2 Money Supply versus S&P500 Charts


Conclusion

We may see a push to new highs for the blue chips early next week, but time is running out. Everything is in place to suggest we are at or within days of a major top.

I expect the major averages to be lower on Thursday April 25 than they were on Thursday April 17.

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Good Luck,

YTD W 5/L 5/T

 


 

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

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