Technical Market Report For August 31, 2024
The good news is:
- The breadth indicators are holding up well.
The Negatives
The first chart covers the last 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 faltered along with the index last week..
The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NH in green has been calculated with NYSE data.
NY NH held up better than OTC_NH, but will be short of confirming a new index high if it occurs in the next few days.
The Positives
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 remained in positive territory.
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 held above 90%.
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 continued to rise in spite of weakness in the index.
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.
NYSE new lows remained dormant last week.
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.
NY SI MoM’s all moved upward last week.
The next chart is similar to the NYSE chart above; except it shows the OTC, in blue and the SI MoM’s have been generated from NASDAQ breadth data.
OTC AD SI MoM remained strong while the others faltered.
Seasonality
Next week includes the first 4 trading days of September 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 1928 to 2023. There are summaries for both the 4th year of the Presidential Cycle and all years combined.
Average returns for the coming week have been modestly positive,
Report for the first 4 days of September.
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 4 (PY4)
Day1 Day2 Day3 Day4 Totals
1964-4 -0.12% 2 0.07% 3 0.39% 4 0.58% 5 0.92%
1968-4 0.34% 2 0.24% 3 -0.06% 4 0.55% 5 1.07%
1972-4 0.58% 5 -0.28% 2 -0.54% 3 -0.32% 4 -0.57%
1976-4 0.99% 3 0.10% 4 0.37% 5 0.21% 2 1.68%
1980-4 0.45% 2 1.20% 3 0.28% 4 0.30% 5 2.24%
Avg 0.45% 0.27% 0.09% 0.26% 1.07%
1984-4 -1.28% 2 -0.31% 3 0.64% 4 -0.21% 5 -1.16%
1988-4 -0.95% 4 0.95% 5 0.22% 2 0.17% 3 0.38%
1992-4 0.44% 2 1.00% 3 0.64% 4 -0.25% 5 1.82%
1996-4 0.07% 2 0.13% 3 -1.58% 4 1.22% 5 -0.16%
2000-4 0.66% 5 -2.15% 2 -3.14% 3 2.12% 4 -2.50%
Avg -0.21% -0.08% -0.64% 0.61% -0.32%
2004-4 0.67% 3 1.24% 4 -1.55% 5 0.76% 2 1.13%
2008-4 -0.77% 2 -0.66% 3 -3.20% 4 -0.14% 5 -4.77%
2012-4 0.26% 2 -0.19% 3 2.17% 4 0.02% 5 2.26%
2016-4 0.27% 4 0.43% 5 0.50% 2 0.15% 3 1.35%
2020-4 1.39% 2 0.98% 3 -4.96% 4 -1.27% 5 -3.86%
Avg 0.36% 0.36% -1.41% -0.09% -0.78%
OTC summary for PY4 1964 - 2020
Averages 0.20% 0.18% -0.65% 0.26% -0.01%
% Winners 73% 67% 53% 67% 60%
MDD 9/4/2020 6.17% -- 9/6/2000 5.22% -- 9/5/2008 4.72%
OTC summary for all years 1963 - 2023
Averages 0.03% 0.08% -0.09% 0.16% 0.18%
% Winners 58% 61% 57% 59% 54%
MDD 9/7/2001 6.52% -- 9/4/2020 6.17% -- 9/4/1974 5.48%
SPX PY4
Day1 Day2 Day3 Day4 Totals
1928-4 0.00% 6 0.48% 2 0.48% 3 -0.62% 4 0.34%
1932-4 0.95% 4 4.37% 5 2.49% 6 -1.66% 2 6.15%
1936-4 -0.25% 2 0.38% 3 -0.37% 4 0.44% 5 0.19%
1940-4 0.00% 2 2.08% 3 1.39% 4 -0.73% 5 2.74%
1944-4 0.31% 5 -0.62% 2 -2.43% 3 -0.32% 4 -3.06%
1948-4 1.19% 3 0.50% 4 0.18% 5 0.49% 2 2.36%
1952-4 0.48% 2 0.40% 3 -0.04% 4 -0.12% 5 0.72%
1956-4 0.80% 2 0.27% 3 0.17% 4 -0.60% 5 0.63%
1960-4 0.23% 4 -0.16% 5 -0.89% 2 -1.24% 3 -2.06%
Avg 0.60% 0.08% -0.60% -0.36% -0.28%
1964-4 0.43% 2 0.16% 3 0.30% 4 0.24% 5 1.13%
1968-4 0.47% 2 0.70% 3 0.72% 4 0.46% 5 2.35%
1972-4 0.38% 5 -0.25% 2 -0.61% 3 -0.24% 4 -0.72%
1976-4 1.12% 3 -0.13% 4 0.37% 5 0.70% 2 2.05%
1980-4 1.10% 2 1.93% 3 -0.56% 4 -0.43% 5 2.05%
Avg 0.70% 0.48% 0.04% 0.15% 1.37%
1984-4 -1.08% 2 -0.36% 3 0.83% 4 -0.77% 5 -1.38%
1988-4 -1.21% 4 2.37% 5 0.42% 2 0.11% 3 1.69%
1992-4 0.49% 2 0.46% 3 0.00% 4 -0.22% 5 0.74%
1996-4 0.42% 2 0.13% 3 -0.94% 4 0.96% 5 0.58%
2000-4 0.20% 5 -0.90% 2 -0.98% 3 0.69% 4 -0.99%
Avg -0.24% 0.34% -0.14% 0.15% 0.12%
2004-4 0.15% 3 1.12% 4 -0.42% 5 0.69% 2 1.54%
2008-4 -0.41% 2 -0.20% 3 -2.99% 4 0.44% 5 -3.16%
2012-4 -0.12% 2 -0.11% 3 2.04% 4 0.40% 5 2.23%
2016-4 0.00% 4 0.42% 5 0.30% 2 -0.01% 3 0.70%
2020-4 0.75% 2 1.54% 3 -3.51% 4 -0.81% 5 -2.04%
Avg 0.07% 0.55% -0.92% 0.14% -0.15%
SPX summary for PY4 1928 - 2020
Averages 0.27% 0.61% -0.17% -0.09% 0.62%
% Winners 67% 67% 50% 46% 71%
MDD 9/4/2020 4.30% -- 9/4/2008 3.59% -- 9/7/1944 3.34%
SPX summary for all years 1928 - 2023
Averages -0.06% 0.13% 0.18% -0.06% 0.19%
% Winners 63% 54% 56% 44% 55%
MDD 9/4/1946 7.15% -- 9/4/1974 4.80% -- 9/7/1933 4.72%
September
As measured by the major indices, September, over all years, has been the weakest month of the year, but not during the 4th year of the Presidential Cycle.
Since 1963, over all years, the OTC in September has been up 56% of the time with an average loss of -0.4%. During the 4th year of the Presidential Cycle September has been up 67% time with no average gain or loss. The best September ever for the OTC was 2010 (+12.0%), the worst 2001 (-17.0%).
The average month has 21 trading days. The chart below has been calculated by averaging the daily percentage change of the OTC for each of the 1st 11 trading days and each of the last 10. In months when there were more than 21 trading days some of the days in the middle were not counted. In months when there were less than 21 trading days some of the days in the middle of the month were counted twice. Dashed vertical lines have been drawn after the 1st trading day and at 5 trading day intervals after that. The line is solid on the 11th trading day, the dividing point.
In the chart below the blue line shows the average of the OTC in September over all years since 1963 while the green line shows the average during the 4th year of the Presidential Cycle over the same period.
Since 1928 the SPX has been up 44% of the time in September with an average loss of -1.2%. During the 4th year of the Presidential Cycle the SPX has been up 50% of the time with an average loss of -0.4%. The best September ever for the SPX was 1939 (+16.5%) the worst 1931 (-29.9%).
The chart below is similar to the one above except it shows the average daily performance over all years for the SPX in September in red and the performance during the 4th year of the Presidential Cycle in green.
Since 1979 the Russell 2000 (R2K) has been up 51% of the time in September with an average loss of -0.8%. During the 4th year of the Presidential Cycle the R2K has been up 64% of the time with an average gain of 0.4%. The best September ever for the R2K, 2010 (+12.3%), the worst 2001 (-13.6%)
The chart below is similar to those above except it shows the daily performance over all years of the R2K in September in magenta and the performance during the 4th year of the Presidential Cycle in green.
Since 1885 the DJIA has been up 43% of the time in September with an average loss of -1.0%. During the 4th year of the Presidential Cycle the DJIA has been up 41% of the time in September with an average gain of 0.1%. The best September ever for the DJIA; 1939 up (+13.5%), the worst 1931 (-30.7%).
The chart below is similar to those above except it shows the daily performance over all years of the DJIA in September in grey and the performance during the 4th year of the Presidential Cycle in green.
Conclusion
Index values faltered a bit last week, but the breadth indicators remained pretty strong.
Seasonality for the coming week has been modestly positive.
The strongest sectors last week were Finance (for the 2nd week) and Utilities while the weakest were Precious metals and Energy (for the 3rd week in a row).
I expect the major averages to be higher on Friday September 6 than they were on Friday August 30.
Last week the DJIA and SPX were up a little while the OTC and Russell 2000 were down a little. I am calling last weeks positive forecast a tie.
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Disclosure: None
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