Technical Market Report

By: Mike Burk | Sun, Jul 24, 2005
Print Email

The good news is:
 • Several of the major indices including the S&P 500 (SPX), Russell 3000, Russell 2000 (R2K), S&P mid cap, Valueline and Wilshire 5000 hit multiyear highs last week. All time highs were attained for the mid and small cap indices.

For the week, the highest number of new highs on both the NYSE and NASDAQ were recorded on Wednesday at 310 on the NYSE and 192 on the NASDAQ (both lower than the highs of the previous week).

The new high indicator is a 10% trend (19 day EMA) of new highs.

The chart below shows the Wilshire 5000 in red, the NYSE new high indicator (NY NH) in pink and the NASDAQ new high indicator (OTC NH) in green.

OTC NH hit a new cycle high on Friday while NY NH is off its high of 2 weeks ago.

The new high indicators are good short term trend indicators and are giving conflicting signals. The current value of OTC NH is 129 so more than 129 NASDAQ new highs will move the indicator upward while the value of NY NH is 226.

The chart below shows the Russell 2000 (R2K) in red, the S&P 500 (SPX) in green and a FastTrack relative strength indicator called Accutrack as a histogram in yellow.

After turning downward a week ago, Accutrack has leveled off indicating the secondaries are continuing to outperform the blue chips at a slightly lower level. This pattern is similar to what we saw last December.

Seasonally the last 5 trading days of July have a modestly upward bias.

However, in the first year of the presidential cycle the last 5 trading days of July have been up 70% of the time.

The report below details the last 5 trading days of July during the 1st year of the presidential cycle in the NASDAQ composite (OTC) from 1965 - 2001 and in the SPX from 1929 - 2001. There are summaries for all years combined for the OTC from 1963 - 2004 and the SPX from 1928 - 2004.

Report for the last 5 days of July
OTC Presidential Year 1
  Day5 Day4 Day3 Day2 Day1 Totals
1965-1 0.66% 1 0.08% 2 -0.17% 3 0.13% 4 0.74% 5 1.43%
1969-1 -0.13% 5 -1.39% 1 -1.63% 2 -1.33% 3 -0.58% 4 -5.06%
1973-1 0.83% 3 -0.02% 4 0.17% 5 -0.44% 1 -0.22% 2 0.33%
1977-1 -0.10% 1 -0.59% 2 -1.12% 3 -0.56% 4 -0.03% 5 -2.40%
1981-1 0.68% 1 -0.24% 2 0.02% 3 0.52% 4 0.76% 5 1.74%
Avg 0.39% -0.43% -0.55% -0.34% 0.13% -0.79%
 
1985-1 0.24% 4 0.06% 5 -1.21% 1 -0.12% 2 0.23% 3 -0.79%
1989-1 0.11% 2 0.59% 3 0.75% 4 0.08% 5 0.23% 1 1.75%
1993-1 0.61% 1 -0.50% 2 0.65% 3 0.23% 4 -0.36% 5 0.64%
1997-1 0.03% 5 -0.39% 1 0.56% 2 1.00% 3 0.36% 4 1.57%
2001-1 1.28% 3 1.95% 4 0.30% 5 -0.55% 1 0.46% 2 3.44%
Avg 0.46% 0.34% 0.21% 0.13% 0.18% 1.32%
 
OTC summary for Pres YR 1 1965 - 2001
Averages 0.42% -0.04% -0.17% -0.10% 0.16% 0.26%
% Winners 80% 40% 60% 50% 60% 70%
MDD 7/31/1969 4.97% -- 7/29/1977 2.39% -- 7/30/1985 1.32%
 
OTC Summary for all years 1963 - 2004
Averages -0.02% 0.07% -0.20% -0.11% 0.06% -0.20%
% Winners 52% 48% 48% 57% 57% 55%
MDD 7/28/2000 9.10% -- 7/31/1974 6.22% -- 7/31/1969 4.97%
 
SPX Presidential Year 1
  Day5 Day4 Day3 Day2 Day1 Totals
1929-1 -0.38% 5 -0.38% 6 -1.30% 1 1.14% 2 1.33% 3 0.41%
1933-1 -1.71% 2 2.62% 3 0.85% 4 -2.34% 5 -4.60% 1 -5.19%
1937-1 -0.12% 2 -1.53% 3 -0.36% 4 0.30% 5 1.25% 6 -0.45%
1941-1 0.48% 6 0.77% 1 -0.19% 2 -0.48% 3 -0.10% 4 0.49%
 
1945-1 0.96% 3 -2.04% 4 0.49% 5 1.04% 1 0.41% 2 0.86%
1949-1 0.34% 1 0.80% 2 0.00% 3 -0.13% 4 0.00% 5 1.01%
1953-1 -0.66% 1 0.17% 2 0.62% 3 0.95% 4 1.06% 5 2.14%
1957-1 0.00% 4 -0.33% 5 -1.09% 1 0.00% 2 -0.02% 3 -1.44%
1961-1 0.55% 2 0.94% 3 1.17% 4 0.15% 5 0.07% 1 2.88%
Avg 0.24% -0.09% 0.24% 0.40% 0.31% 1.09%
 
1965-1 -0.02% 1 -0.21% 2 0.19% 3 0.77% 4 0.67% 5 1.40%
1969-1 -0.91% 5 -1.90% 1 -0.81% 2 0.50% 3 2.11% 4 -1.00%
1973-1 1.39% 3 0.19% 4 -0.24% 5 -0.31% 1 -0.94% 2 0.09%
1977-1 -0.81% 1 -0.58% 2 -1.63% 3 0.15% 4 0.06% 5 -2.79%
1981-1 1.12% 1 -0.59% 2 0.02% 3 0.66% 4 0.70% 5 1.91%
Avg 0.15% -0.62% -0.49% 0.36% 0.52% -0.08%
 
1985-1 0.25% 4 0.18% 5 -1.46% 1 0.17% 2 0.52% 3 -0.33%
1989-1 0.06% 2 1.25% 3 1.17% 4 0.05% 5 1.15% 1 3.67%
1993-1 0.45% 1 -0.19% 2 -0.23% 3 0.68% 4 -0.47% 5 0.23%
1997-1 -0.16% 5 -0.25% 1 0.62% 2 1.06% 3 0.21% 4 1.49%
2001-1 1.61% 3 1.04% 4 0.24% 5 -0.11% 1 0.56% 2 3.34%
Avg 0.44% 0.41% 0.07% 0.37% 0.39% 1.68%
 
SPX summary for Pres YR 1 1929 - 2001
Averages 0.13% 0.00% -0.10% 0.22% 0.21% 0.46%
% Winners 53% 47% 47% 68% 68% 68%
MDD 7/31/1933 6.84% -- 7/29/1969 3.58% -- 7/27/1977 2.98%
 
SPX summary for all years 1928 - 2004
Averages 0.01% 0.13% 0.02% 0.10% 0.14% 0.39%
% Winners 55% 59% 55% 61% 66% 60%
MDD 7/31/1933 6.84% -- 7/31/1974 6.68% -- 7/31/1943 5.12%

There has been some deterioration in the market internals over the past two weeks, but the strong seasonal bias next week should carry the market upward.

I expect the major indices to be higher on Friday July 29 than they were on Friday July 22.

The deterioration I documented last week lasted one day then the market headed to new highs making last weeks negative forecast a miss.

This report is free to anyone who wants it, so please tell your friends.
If it is not for you, reply with REMOVE in the subject line.


 

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 © 2003-2016 Mike Burk

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