Technical Market Report For March 25, 2023
The good news is:
- Banking system risk has been eliminated.
The Negatives
There have been no new highs to speak of; while new lows have been well into triple digits.
The first chart covers the past 6 months showing the Nasdaq composite (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 vertical lines have been drawn on the first trading day of each month. 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 deeply in negative territory.
The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY HL ratio, in blue, has been calculated with NYSE data.
NY HL ratio also remained deep in negative territory.
The next chart covers the last 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 was mostly flat last week at a very high level. The current value of the indicator is 256.
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 stalled for a few days last week before continuing downward. The current value of NY NL is 136.
The Positives
The market managed a gain last week in spite of extraordinarily bad breadth.
Seasonality
Next week includes the last 5 trading days of March during the 3rd 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 2021 while SPX data runs from 1928 to 2021. There are summaries for both the 3rd year of the Presidential Cycle and all years combined.
Average returns for the coming week have been modest and mixed.
Report for the last 5 days of March.
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 3 (PY3)
Day5 Day4 Day3 Day2 Day1 Totals
1963-3 0.64% 1 0.54% 2 0.38% 3 0.76% 4 0.00% 5 2.33%
1967-3 0.66% 1 0.16% 2 0.69% 3 0.20% 4 0.32% 5 2.04%
1971-3 -0.10% 4 0.45% 5 0.12% 1 0.23% 2 0.50% 3 1.21%
1975-3 -1.98% 1 -0.12% 2 1.65% 3 0.82% 4 -0.68% 1 -0.30%
1979-3 -0.36% 1 0.51% 2 0.07% 3 0.32% 4 0.36% 5 0.90%
Avg -0.22% 0.31% 0.58% 0.47% 0.10% 1.23%
1983-3 0.19% 5 -0.64% 1 -0.14% 2 0.75% 3 0.01% 4 0.16%
1987-3 -0.15% 3 0.28% 4 -0.42% 5 -2.24% 1 0.70% 2 -1.83%
1991-3 -0.10% 5 0.94% 1 2.15% 2 0.79% 3 -0.01% 4 3.77%
1995-3 0.48% 1 0.43% 2 -0.84% 3 -0.28% 4 0.04% 5 -0.17%
1999-3 2.94% 4 -0.64% 5 3.04% 1 -0.50% 2 -0.76% 3 4.08%
Avg 0.67% 0.07% 0.76% -0.30% -0.01% 1.20%
2003-3 1.55% 2 -0.26% 3 -0.23% 4 -1.06% 5 -2.08% 1 -2.07%
2007-3 0.27% 1 -0.74% 2 -0.83% 3 0.03% 4 0.16% 5 -1.11%
2011-3 0.24% 5 -0.45% 1 0.96% 2 0.72% 3 0.15% 4 1.63%
2015-3 -2.37% 3 -0.27% 4 0.57% 5 1.15% 1 -0.94% 2 -1.86%
2019-3 -0.07% 1 0.71% 2 -0.63% 3 0.34% 4 0.78% 5 1.14%
Avg -0.07% -0.20% -0.03% 0.24% -0.38% -0.46%
OTC summary for PY3 1963 - 2019
Averages 0.13% 0.06% 0.44% 0.14% -0.10% 0.66%
% Winners 53% 53% 60% 73% 60% 60%
MDD 3/31/2003 3.58% -- 3/30/1987 2.65% -- 3/26/2015 2.63%
OTC summary for all years 1963 - 2022
Averages 0.03% 0.19% -0.22% -0.01% 0.15% 0.14%
% Winners 53% 50% 55% 58% 63% 58%
MDD 3/30/2000 10.18% -- 3/27/1980 7.82% -- 3/29/2001 7.69%
SPX PY3
Day5 Day4 Day3 Day2 Day1 Totals
1931-3 -1.35% 4 -1.88% 5 -2.15% 6 -1.07% 1 0.18% 2 -6.27%
1935-3 -0.83% 2 1.08% 3 0.12% 4 0.00% 5 0.24% 6 0.60%
1939-3 -0.42% 1 -1.33% 2 0.76% 3 -3.44% 4 -4.60% 5 -9.03%
1943-3 0.80% 5 0.27% 6 1.41% 1 0.87% 2 -0.09% 3 3.26%
1947-3 1.40% 3 1.12% 4 -0.45% 5 -0.13% 6 -0.91% 1 1.01%
1951-3 -0.09% 2 -1.16% 3 0.33% 4 0.70% 5 -0.37% 6 -0.60%
1955-3 0.08% 5 -0.35% 1 0.05% 2 -0.90% 3 0.16% 4 -0.95%
1959-3 0.16% 2 -0.14% 3 -0.21% 4 -0.56% 1 -0.02% 2 -0.77%
Avg 0.47% -0.06% 0.23% 0.00% -0.25% 0.39%
1963-3 0.03% 1 0.29% 2 0.42% 3 -0.15% 4 -0.02% 5 0.57%
1967-3 -0.08% 1 0.04% 2 -0.20% 3 -0.03% 4 -0.55% 5 -0.82%
1971-3 -0.01% 4 0.34% 5 0.08% 1 0.23% 2 0.05% 3 0.69%
1975-3 -2.36% 1 0.79% 2 1.86% 3 0.31% 4 -0.58% 1 0.01%
1979-3 -0.55% 1 1.43% 2 -0.35% 3 -0.09% 4 -0.43% 5 0.00%
Avg -0.59% 0.58% 0.36% 0.05% -0.31% 0.09%
1983-3 -0.46% 5 -0.54% 1 -0.17% 2 1.19% 3 -0.28% 4 -0.26%
1987-3 -0.42% 3 0.18% 4 -1.60% 5 -2.34% 1 0.86% 2 -3.31%
1991-3 0.25% 5 0.64% 1 1.75% 2 -0.25% 3 -0.03% 4 2.35%
1995-3 0.45% 1 0.14% 2 -0.15% 3 -0.18% 4 -0.30% 5 -0.05%
1999-3 1.69% 4 -0.56% 5 2.14% 1 -0.72% 2 -1.11% 3 1.44%
Avg 0.30% -0.03% 0.39% -0.46% -0.17% 0.03%
2003-3 1.22% 2 -0.55% 3 -0.16% 4 -0.58% 5 -1.77% 1 -1.85%
2007-3 0.10% 1 -0.62% 2 -0.80% 3 0.37% 4 -0.12% 5 -1.06%
2011-3 0.32% 5 -0.27% 1 0.71% 2 0.67% 3 -0.18% 4 1.23%
2015-3 -1.46% 3 -0.24% 4 0.24% 5 1.22% 1 -0.88% 2 -1.11%
2019-3 -0.08% 1 0.72% 2 -0.46% 3 0.36% 4 0.67% 5 1.20%
Avg 0.02% -0.19% -0.10% 0.41% -0.46% -0.32%
SPX summary for PY3 1931 - 2019
Averages -0.07% -0.03% 0.14% -0.20% -0.44% -0.59%
% Winners 48% 52% 52% 39% 26% 48%
MDD 3/31/1939 8.80% -- 3/30/1931 6.30% -- 3/30/1987 4.12%
SPX summary for all years 1928 - 2022
Averages -0.01% 0.11% -0.09% 0.01% -0.13% -0.11%
% Winners 39% 50% 52% 46% 44% 55%
MDD 3/31/1938 9.09% -- 3/31/1939 8.80% -- 3/31/1932 7.00%
Conclusion
The market had a positive week while new lows remained at threatening levels.
The strongest sectors last week were Precious metals (for the 2nd week) and Technology while the weakest were Energy (for the 2nd week and Banks.
I expect the major averages to be lower on Friday, March 31 than they were on Friday, March 24.
Last week's negative forecast was a miss.
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