Technical Market Report For September 7, 2024
The good news is:
- Seasonality has been positive for next week.
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 is leading the index down.
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 continued rising as the index fell, but was below its recent high.
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 sharply downward last week.
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 also turned sharply downward.
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 turned downward 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 SI MoM’s also headed downward.
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 has fallen into negative territory.
The Positives
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 fell, but remained in comfortable positive territory.
Seasonality
Next week includes the 5 trading days prior to the 2nd Friday 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 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 stronger during the 4th year of the Presidential Cycle than other years,
Report for the week before the 2nd Friday of September.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.
OTC Presidential Year 4 (PY4)
Year Mon Tue Wed Thur Fri Totals
1964-4 0.00% 0.29% 0.38% 0.07% -0.24% 0.50%
1968-4 0.16% 0.27% 0.00% -0.01% -0.50% -0.09%
1972-4 0.00% -0.28% -0.54% -0.32% -0.06% -1.21%
1976-4 0.00% 0.21% 0.05% -0.44% 0.36% 0.19%
1980-4 -0.62% 0.21% 0.80% 0.99% 0.75% 2.13%
Avg -0.23% 0.14% 0.17% 0.06% 0.06% 0.31%
1984-4 -0.46% 0.51% -0.14% 0.75% 0.89% 1.55%
1988-4 0.00% 0.22% 0.17% 0.47% 0.49% 1.35%
1992-4 0.00% -0.40% 0.65% 1.10% 0.30% 1.66%
1996-4 0.82% 0.06% 0.40% 1.02% 1.96% 4.26%
2000-4 0.00% -2.15% -3.14% 2.12% -2.93% -6.09%
Avg 0.18% -0.35% -0.41% 1.09% 0.15% 0.55%
2004-4 0.00% 0.76% -0.43% 1.03% 1.32% 2.68%
2008-4 0.62% -2.64% 0.85% 1.32% 0.14% 0.29%
2012-4 -1.03% 0.02% 0.32% 1.33% 0.89% 1.52%
2016-4 0.00% 0.50% 0.15% -0.46% -2.54% -2.35%
2020-4 0.00% -4.11% 2.71% -1.99% -0.60% -4.00%
Avg -0.21% -1.10% 0.72% 0.25% -0.16% -0.37%
OTC summary for PY4 1964 - 2020
Avg -0.09% -0.44% 0.16% 0.47% 0.02% 0.16%
Win% 50% 67% 71% 67% 60% 67%
OTC summary for all years 1963 - 2023
Avg -0.29% -0.06% -0.03% 0.05% 0.04% -0.12%
Win% 48% 49% 55% 62% 56% 57%
SPX PY4
Year Mon Tue Wed Thur Fri Totals
1956-4 -0.52% -0.38% -0.70% -0.13% 0.47% -1.26%
1960-4 0.00% -0.89% -1.24% -0.09% 0.66% -1.56%
1964-4 0.00% 0.13% 0.22% 0.06% 0.42% 0.83%
1968-4 0.03% -0.49% 0.00% -0.21% 0.34% -0.33%
1972-4 0.00% -0.25% -0.61% -0.24% -0.13% -1.22%
1976-4 0.00% 0.70% -0.09% -0.51% 0.24% 0.34%
1980-4 -1.26% 0.62% 0.60% 0.68% -0.10% 0.54%
Avg -0.61% 0.14% 0.03% -0.04% 0.16% 0.03%
1984-4 -0.07% 0.12% 0.14% 1.98% 0.50% 2.67%
1988-4 0.00% 0.42% 0.11% 0.00% 0.36% 0.89%
1992-4 0.00% -0.63% 0.46% 0.86% -0.09% 0.60%
1996-4 1.23% 0.01% 0.52% 0.58% 1.40% 3.74%
2000-4 0.00% -0.90% -0.98% 0.69% -0.53% -1.73%
Avg 0.58% -0.20% 0.05% 0.82% 0.33% 1.23%
2004-4 0.00% 0.69% -0.45% 0.19% 0.50% 0.92%
2008-4 2.05% -3.41% 0.61% 1.38% 0.21% 0.84%
2012-4 -0.61% 0.31% 0.21% 1.63% 0.40% 1.93%
2016-4 0.00% 0.30% -0.01% -0.22% -2.45% -2.39%
2020-4 0.00% -2.78% 2.01% -1.76% 0.05% -2.47%
Avg 0.72% -0.98% 0.48% 0.24% -0.26% -0.23%
SPX summary for PY4 1956 - 2020
Avg 0.12% -0.38% 0.05% 0.29% 0.13% 0.14%
Win% 43% 53% 56% 59% 71% 59%
SPX summary for all years 1953 - 2023
Avg -0.24% -0.06% 0.01% -0.15% 0.04% -0.26%
Win% 45% 51% 57% 48% 62% 51%
Conclusion
Both the indices and breadth indicators had a bad week.
The decline was so sudden and severe that I expect it to be, at least partially, retraced.
Seasonality for the coming week has been modestly positive during the 4th year of the Presidential Cycle and modestly negative during the other years.
The strongest sectors last week were Utilities (for the 2nd week in a row) and Telecomm while the weakest were Precious metals (for the 2nd week in a row) and Electronics.
I expect the major averages to be higher on Friday September 13 than they were on Friday September 6.
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Disclosure: None
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