Technical Market Report For Saturday, January 27
The good news is:
The Dow Jones Industrial average (DJIA) closed at an all time highs last Friday. While the S&P 500 (SPX) closed at an all time high and NASDAQ composite (OTC) closed at a multi year high on Thursday.
The Negatives
The first chart covers the last 6 months showing the 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 did not confirm the new SPX high.
(Click on image to enlarge)
The next chart is similar to the one above except it shows the OTC in blue and OTC NH, in green, has been calculated with NASDAQ data.
OTC NH also failed to confirm the multi year index high.
(Click on image to enlarge)
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 moved into positive territory last week,
(Click on image to enlarge)
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 rose to a very strong 88%
(Click on image to enlarge).
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 modestly upward as the index hit a new multi year high.
(Click on image to enlarge)
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.
Ditto NY NL.
(Click on image to enlarge)
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.
All of the NY SI Mom’s have turned upward.
(Click on image to enlarge)
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.
Ditto NASDAQ SI’s.
(Click on image to enlarge)
Seasonality
Next week includes the last 3 trading days of January and the first 2 trading days of February 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 by all measures..
Report for the last 3 days of January and the first 2 days of February.
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.
Presidential Year 4 (PY4)
Day3 Day2 Day1 Day1 Day2 Totals
1964-4 0.27% 3 -0.35% 4 0.00% 5 0.25% 1 0.16% 2 0.33%
1968-4 0.50% 1 0.35% 2 -0.86% 3 -0.47% 4 0.12% 5 -0.37%
1972-4 0.84% 4 0.91% 5 0.36% 1 0.60% 2 0.74% 3 3.46%
1976-4 -0.15% 3 1.80% 4 1.04% 5 0.26% 1 0.11% 2 3.07%
1980-4 -0.26% 2 0.63% 3 0.28% 4 0.34% 5 -0.17% 1 0.82%
Avg 0.24% 0.67% 0.16% 0.20% 0.19% 1.46%
1984-4 -0.88% 5 -1.45% 1 -0.30% 2 -0.75% 3 -0.10% 4 -3.47%
1988-4 0.17% 3 0.75% 4 0.67% 5 0.45% 1 0.29% 2 2.33%
1992-4 -0.80% 3 0.82% 4 -0.19% 5 0.52% 1 1.21% 2 1.57%
1996-4 0.14% 1 0.84% 2 0.81% 3 0.92% 4 0.24% 5 2.96%
2000-4 -0.74% 4 -2.00% 5 1.37% 1 2.00% 2 0.54% 3 1.17%
Avg -0.42% -0.21% 0.47% 0.63% 0.44% 0.91%
2004-4 -1.83% 3 -0.44% 4 -0.10% 5 -0.15% 1 0.15% 2 -2.36%
2008-4 0.35% 2 -0.38% 3 1.74% 4 0.98% 5 -1.26% 1 1.42%
2012-4 0.40% 5 -0.16% 1 0.07% 2 1.22% 3 0.40% 4 1.93%
2016-4 -2.00% 3 0.86% 4 2.00% 5 0.14% 1 -2.00% 2 -1.00%
2020-4 0.06% 3 0.26% 4 -1.59% 5 1.34% 1 2.00% 2 2.06%
Avg -0.60% 0.03% 0.42% 0.71% -0.14% 0.41%
OTC summary for PY4 1964 - 2020
Averages -0.26% 0.16% 0.35% 0.51% 0.16% 0.93%
% Winners 53% 60% 60% 80% 73% 73%
MDD 2/2/1984 3.43% -- 1/28/2000 2.73% -- 2/2/2004 2.50%
OTC summary for all years 1963 - 2023
Averages 0.00% 0.06% 0.25% 0.32% 0.09% 0.71%
% Winners 57% 56% 64% 69% 68% 64%
MDD 2/3/1970 5.82% -- 1/30/2009 3.96% -- 2/2/2001 3.61%
SPX PY4
Day3 Day2 Day1 Day1 Day2 Totals
1928-4 -0.62% 6 -0.51% 1 0.46% 2 -0.23% 3 0.57% 4 -0.33%
1932-4 -1.47% 4 -1.12% 5 -0.63% 6 2.00% 1 -2.00% 2 -3.22%
1936-4 1.00% 3 -0.49% 4 1.63% 5 -0.07% 6 0.98% 1 3.05%
1940-4 0.00% 1 -0.58% 2 -0.33% 3 0.00% 4 0.08% 5 -0.82%
1944-4 0.60% 5 0.00% 6 0.34% 1 -0.17% 2 -0.25% 3 0.51%
1948-4 1.10% 4 0.20% 5 0.07% 6 0.14% 1 -0.61% 2 0.90%
1952-4 -0.16% 2 -1.38% 3 -0.37% 4 0.66% 5 0.45% 6 -0.80%
1956-4 -0.25% 5 0.35% 1 0.74% 2 0.48% 3 0.43% 4 1.74%
1960-4 -0.25% 3 -1.04% 4 -0.93% 5 0.63% 1 1.54% 2 -0.05%
Avg 0.21% -0.37% -0.03% 0.35% 0.31% 0.46%
1964-4 -0.61% 3 0.09% 4 0.44% 5 -0.09% 1 -0.12% 2 -0.28%
1968-4 -0.11% 1 -0.49% 2 -0.70% 3 0.35% 4 -0.31% 5 -1.27%
1972-4 0.98% 4 0.64% 5 -0.21% 1 0.07% 2 0.64% 3 2.11%
1976-4 -0.55% 3 1.60% 4 0.75% 5 0.01% 1 0.31% 2 2.12%
1980-4 -0.68% 2 0.99% 3 -0.90% 4 0.84% 5 -0.65% 1 -0.40%
Avg -0.19% 0.57% -0.12% 0.23% -0.03% 0.46%
1984-4 -0.18% 5 -0.65% 1 0.33% 2 -0.41% 3 0.38% 4 -0.53%
1988-4 -0.08% 3 1.57% 4 1.49% 5 -0.79% 1 0.21% 2 2.40%
1992-4 -1.11% 3 0.31% 4 -0.69% 5 0.18% 1 1.05% 2 -0.25%
1996-4 0.42% 1 0.95% 2 0.93% 3 0.38% 4 -0.41% 5 2.27%
2000-4 -0.39% 4 -2.00% 5 2.00% 1 1.06% 2 -0.01% 3 0.66%
Avg -0.27% 0.04% 0.81% 0.09% 0.24% 0.91%
2004-4 -1.36% 3 0.50% 4 -0.26% 5 0.37% 1 0.07% 2 -0.69%
2008-4 0.62% 2 -0.48% 3 1.68% 4 1.22% 5 -1.05% 1 1.99%
2012-4 -0.16% 5 -0.25% 1 -0.05% 2 0.89% 3 0.11% 4 0.54%
2016-4 -1.09% 3 0.55% 4 2.00% 5 -0.04% 1 -1.87% 2 -0.45%
2020-4 -0.09% 3 0.31% 4 -1.77% 5 0.73% 1 1.50% 2 0.68%
Avg -0.42% 0.13% 0.32% 0.63% -0.25% 0.41%
SPX summary for PY4 1928 - 2020
Averages -0.19% -0.04% 0.25% 0.34% 0.04% 0.41%
% Winners 25% 50% 54% 67% 58% 50%
MDD 2/2/1932 3.23% -- 1/28/2000 2.38% -- 1/29/1960 2.20%
SPX summary for all years 1928 - 2023
Averages -0.01% 0.11% 0.23% 0.21% 0.11% 0.65%
% Winners 46% 60% 61% 65% 61% 66%
MDD 2/2/1933 5.13% -- 2/3/1941 4.49% -- 2/2/2009 4.01%
February
Since 1963, over all years, the OTC in February has been up 54% of the time with an average gain of 0.5%. During the 4th year of the Presidential Cycle February has been up 53% time with an average gain of 1.6%. The best February for the OTC was 2000 (+19.2%), the worst 2001 (-22.4%).
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 February over all years since 1963 while the green line shows the average during the 4th year of the Presidential Cycle over the same period.
(Click on image to enlarge)
Since 1928 the SPX in February has been up 52% of the time with an average loss of 0.1%. During the 4th year of the Presidential Cycle the SPX has been up 50% of the time with an average loss of -0.3%. The best February for the SPX was 1931 (+11.4%) the worst 1933 (-18.4%).
The chart below is similar to the one above except it shows the daily average performance over all years since 1928 for the SPX in February in red and the performance during the 4th year of the Presidential Cycle in green.
(Click on image to enlarge)
Since 1979 the Russell 2000 (R2K) has been up 58% of the time in February with an average gain of 1.0%. During the 4th year of the Presidential Cycle the R2K has been up 55% of the time with an average gain of 1.3%. The best February for the R2K 2000 (+16.4%), the worst 2009 (-12.3%)
The chart below is similar to those above except it shows the daily performance over all years since 1979 of the R2K in February in magenta and the performance during the 4th year of the Presidential Cycle in green.
(Click on image to enlarge)
Since 1885 the Dow Jones Industrial Average (DJIA) has been up 52% of the time in February with an average loss of -0.2%. During the 4th year of the Presidential Cycle the DJIA has been up 50% of the time in February with an average loss of -0.8%. The best February for the DJIA 1931 (+13.2%), the worst 1933 (-15.6%)
The chart below is similar to those above except it shows the daily performance over all years since 1885 of the DJIA in February in blue and the performance during the 4th year of the Presidential Cycle in green.
(Click on image to enlarge)
Conclusion
Breadth improved a bit last week as the blue chip indices hit recent and all time highs.
The strongest sectors last week were Energy (up from the bottom last week) and Technology while the weakest were Precious metals and Utilities (for the 2nd week).
I expect the major averages to be lower on Friday February 2 than they were on Friday January 26.
Last weeks negative forecast was a miss.
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