Technical Market Report - Saturday, March 2
The good news is:
- All of the major averages except the Dow Jones Industrial Average closed at an all time or multi year highs on Friday.
The Negatives
The negatives are hard to find.
Most economists have been saying the economy world wide is no the brink of collapse, but, so far, regarding the US, they have been wrong.
The Positives
The first chart covers the last 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.
NY NH confirmed the all time SPX high on Friday.
The next chart is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH, in green, has been calculated with NASDAQ data.
OTC NH failed to confirm the index all time high on Friday, but it was close and moving upward quickly.
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 (equal numbers of new highs and new lows).
OTC HL Ratio moved upward finishing the week at a comfortable 76%,
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 with NYSE data.
NY HL ratio has remained quite strong finishing the week at 89%.
The next chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good).
OTC NL turned upward as the index hit its new all time high. However, the numeric level of OTC NL is still a bit high at 100.
The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.
NY NL remained flat at a low level as the index closed at its all time high.
Summation indices are running totals of oscillator values.
Short term momentum indicators applied to summation indices make them nearly binary.
The next chart covers the past 6 months showing the SPX in red and momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE.
The NY SI Mom’s improved and are now all solidly positive.
The next chart is similar to the one above; except it shows the OTC, in blue and the SI’s have been generated from NASDAQ breadth data.
NASDAQ SI’s are less clear, but the weakest (OTC UD SI Mom) appears to have turned upward last Friday.
Seasonality
Next week includes the 5 trading days prior to the 2nd Friday of March during the 4th 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 2023 while SPX data runs from 1953 to 2023. There are summaries for both the 4th 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 modestly positive over all years, but are negatively skewed by a really bad week in 2020.
Report for the week before the 2nd Friday of March.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.
OTC Prsidential Year 4 (PY4)
Year Mon Tue Wed Thur Fri Totals
1964-4 0.61% -0.05% 0.32% -0.24% 0.24% 0.88%
1968-4 -0.63% 0.59% -3.92% 1.27% -0.15% -2.84%
1972-4 0.54% -0.04% 0.45% 0.35% -0.23% 1.07%
1976-4 0.56% 0.01% 0.24% 1.12% -0.24% 1.69%
1980-4 -1.67% 0.56% 0.05% 0.24% -0.37% -1.19%
Avg -0.12% 0.21% -0.57% 0.55% -0.15% -0.08%
1984-4 -0.66% -0.64% -1.22% 0.20% -0.26% -2.58%
1988-4 0.32% 0.64% 0.89% -0.93% -0.34% 0.58%
1992-4 -0.02% 1.24% -1.01% -0.20% 0.44% 0.45%
1996-4 -0.11% 1.10% -0.46% 0.12% -2.69% -2.04%
2000-4 -0.20% -1.16% 1.02% 3.06% 0.03% 2.74%
Avg -0.13% 0.23% -0.16% 0.45% -0.56% -0.17%
2004-4 -1.90% -0.68% -1.55% -1.03% 2.10% -3.06%
2008-4 -1.95% 3.98% -0.53% 0.88% -2.26% 0.13%
2012-4 -0.86% -1.36% 0.87% 1.18% 0.60% 0.43%
2016-4 -0.19% -1.26% 0.55% -0.26% 1.85% 0.69%
2020-4 -7.29% 4.95% -4.70% -9.43% 9.35% -7.13%
Avg -2.44% 1.13% -1.07% -1.73% 2.33% -1.79%
OTC summary for PY4 1964 - 2020
Avg -0.90% 0.52% -0.60% -0.24% 0.54% -0.68%
Win% 27% 53% 53% 60% 47% 60%
OTC summary for all years 1963 - 2023
Avg -0.26% 0.41% 0.01% 0.10% 0.07% 0.32%
Win% 43% 55% 61% 62% 51% 64%
SPX PY4
Year Mon Tue Wed Thur Fri Totals
1956-4 0.55% -0.04% -0.07% 0.24% 1.26% 1.93%
1960-4 -1.01% -1.02% 1.07% -0.39% 0.76% -0.59%
1964-4 0.03% 0.33% 0.46% 0.16% 0.08% 1.06%
1968-4 -1.34% -0.23% 1.76% -0.18% -0.08% -0.07%
1972-4 0.77% 0.09% 0.08% -0.02% -0.52% 0.40%
1976-4 1.09% 0.39% 0.36% 0.94% -1.01% 1.77%
1980-4 -0.36% 1.19% -0.84% -1.17% -0.18% -1.37%
Avg 0.04% 0.36% 0.36% -0.05% -0.34% 0.36%
1984-4 -0.85% -1.04% -1.08% 0.40% -0.54% -3.10%
1988-4 0.03% 0.77% -0.14% -1.94% 0.42% -0.86%
1992-4 0.19% 0.41% -0.70% -0.03% 0.48% 0.35%
1996-4 1.00% 0.77% -0.58% 0.25% -3.08% -1.64%
2000-4 -1.27% -2.57% 0.82% 2.56% -0.47% -0.93%
Avg -0.18% -0.33% -0.33% 0.25% -0.64% -1.24%
2004-4 -0.84% -0.58% -1.46% -1.52% 1.25% -3.15%
2008-4 -1.55% 3.71% -0.90% 0.51% -2.08% -0.30%
2012-4 -0.39% -1.54% 0.69% 0.98% 0.36% 0.11%
2016-4 0.09% -1.12% 0.51% 0.02% 1.64% 1.12%
2020-4 -7.60% 4.94% -4.89% -9.51% 9.29% -7.77%
Avg -2.06% 1.08% -1.21% -1.90% 2.09% -2.00%
SPX summary for PY4 1956 - 2020
Avg -0.67% 0.26% -0.29% -0.51% 0.45% -0.77%
Win% 47% 53% 47% 53% 53% 41%
SPX summary for all years 1953 - 2023
Avg -0.19% 0.23% 0.02% 0.00% 0.09% 0.16%
Win% 50% 54% 55% 60% 47% 56%
Conclusion
Everything was strong last week, lets hope it continues.
The strongest sectors last week were Basic Material and Energy (both on top for the 3rd week in a row) while the weakest were Biotech and Utilities.
I expect the major averages to be higher on Friday March 8 than they were on Friday March 1.
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