Technical Market Report - Saturday, February 24
The good news is:
The S&P 500 (SPX) & Dow Jones Industrial Average (DJIA) closed at an all time high Friday and the NASDAQ composite closed at an all time 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.
By a small margin, NY NH failed to confirm the new SPX high.
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.
The margin by which the OTC NH failed to confirm the index was not close. OTC NH has been declining for the past 2 weeks.
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 declined last week, but 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 has remained quite strong.
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 downward as the index hit its new all time high.
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 declined modestly 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, but are not offering much clarity.
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 confusing.
Seasonality
Next week includes the last 4 trading days of February and the 1st trading day 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 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 4 days of February and first day 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 4 (PY4)
Day4 Day3 Day2 Day1 Day1 Totals
1964-4 -0.05% 2 -0.05% 3 0.32% 4 -0.27% 5 0.56% 1 0.51%
1968-4 0.48% 1 -0.45% 2 -0.05% 3 0.02% 4 -0.94% 5 -0.93%
1972-4 0.32% 4 0.67% 5 0.09% 1 0.35% 2 0.73% 3 2.15%
1976-4 0.46% 2 0.39% 3 -0.69% 4 -1.30% 5 -0.01% 1 -1.15%
1980-4 0.34% 2 -0.49% 3 -0.17% 4 0.36% 5 -0.73% 1 -0.69%
Avg 0.31% 0.01% -0.10% -0.17% -0.08% -0.02%
1984-4 1.76% 5 1.15% 1 -0.70% 2 0.01% 3 0.37% 4 2.59%
1988-4 0.57% 3 0.13% 4 -0.06% 5 0.98% 1 0.10% 2 1.72%
1992-4 -0.56% 2 1.77% 3 0.25% 4 -0.08% 5 0.32% 1 1.69%
1996-4 -0.42% 1 -0.62% 2 0.13% 3 -0.68% 4 -1.27% 5 -2.86%
2000-4 1.48% 4 -0.59% 5 -0.27% 1 2.60% 2 1.86% 3 5.07%
Avg 0.57% 0.37% -0.13% 0.57% 0.27% 1.64%
2004-4 -0.10% 2 0.87% 3 0.47% 4 -0.14% 5 1.38% 1 2.49%
2008-4 0.75% 2 0.37% 3 -0.94% 4 -2.58% 5 -0.57% 1 -2.96%
2012-4 0.23% 5 0.08% 1 0.69% 2 -0.67% 3 0.74% 4 1.08%
2016-4 0.87% 3 0.87% 4 0.18% 5 -0.71% 1 2.89% 2 4.10%
2020-4 -2.77% 2 0.17% 3 -4.61% 4 0.01% 5 4.49% 1 -2.71%
Avg -0.21% 0.47% -0.84% -0.82% 1.79% 0.40%
OTC summary for PY4 1964 - 2020
Averages 0.22% 0.29% -0.36% -0.14% 0.66% 0.67%
% Winners 67% 67% 47% 47% 67% 60%
MDD 2/27/2020 7.10% -- 3/3/2008 4.04% -- 3/1/1996 2.84%
OTC summary for all years 1963 - 2023
Averages 0.05% 0.19% -0.17% -0.12% 0.32% 0.27%
% Winners 54% 59% 61% 46% 63% 59%
MDD 3/2/2009 8.25% -- 2/27/2020 7.10% -- 2/28/2001 6.79%
SPX PY4
Day4 Day3 Day2 Day1 Day1 Totals
1928-4 0.06% 6 -0.47% 1 0.29% 2 0.58% 3 0.23% 4 0.70%
1932-4 -0.95% 4 -0.12% 5 0.12% 6 -0.72% 1 0.72% 2 -0.94%
1936-4 -0.49% 3 2.37% 4 -0.61% 5 -0.34% 6 1.51% 1 2.44%
1940-4 0.00% 1 -0.16% 2 0.08% 3 -0.16% 4 -0.58% 5 -0.82%
1944-4 0.00% 5 0.00% 6 0.08% 1 -0.59% 2 0.42% 3 -0.08%
1948-4 0.50% 3 -0.64% 4 -0.36% 5 0.50% 6 0.50% 1 0.51%
1952-4 -0.34% 2 0.13% 3 0.47% 4 -0.13% 5 0.09% 6 0.22%
1956-4 0.82% 5 -0.11% 1 0.35% 2 -0.20% 3 0.44% 4 1.31%
1960-4 -0.36% 3 0.34% 4 0.41% 5 -0.07% 1 -0.20% 2 0.13%
Avg 0.12% -0.06% 0.19% -0.10% 0.25% 0.42%
1964-4 0.00% 2 0.24% 3 -0.32% 4 0.23% 5 0.22% 1 0.37%
1968-4 -0.78% 1 0.39% 2 -0.50% 3 -0.80% 4 -0.28% 5 -1.97%
1972-4 0.07% 4 0.69% 5 0.01% 1 0.36% 2 0.73% 3 1.86%
1976-4 0.41% 2 -0.33% 3 -1.55% 4 -0.40% 5 0.31% 1 -1.56%
1980-4 0.57% 2 -1.40% 3 -0.03% 4 1.17% 5 -1.02% 1 -0.71%
Avg 0.05% -0.08% -0.48% 0.11% -0.01% -0.40%
1984-4 2.09% 5 1.14% 1 -1.56% 2 0.15% 3 0.72% 4 2.54%
1988-4 -0.22% 3 -1.08% 4 0.34% 5 2.04% 1 -0.22% 2 0.85%
1992-4 -0.44% 2 1.19% 3 -0.36% 4 -0.28% 5 -0.06% 1 0.05%
1996-4 -1.31% 1 -0.50% 2 -0.39% 3 -0.67% 4 0.62% 5 -2.24%
2000-4 -0.54% 4 -1.48% 5 1.10% 1 1.36% 2 0.94% 3 1.38%
Avg -0.08% -0.14% -0.17% 0.52% 0.40% 0.52%
2004-4 -0.17% 2 0.40% 3 0.11% 4 0.00% 5 0.96% 1 1.31%
2008-4 0.69% 2 -0.09% 3 -0.89% 4 -2.71% 5 0.05% 1 -2.95%
2012-4 0.17% 5 0.14% 1 0.34% 2 -0.47% 3 0.62% 4 0.78%
2016-4 0.44% 3 1.13% 4 -0.19% 5 -0.81% 1 2.39% 2 2.97%
2020-4 -3.03% 2 -0.38% 3 -4.42% 4 -0.82% 5 4.60% 1 -4.04%
Avg -0.38% 0.24% -1.01% -0.96% 1.72% -0.39%
SPX summary for PY4 1928 - 2020
Averages -0.12% 0.06% -0.31% -0.12% 0.57% 0.09%
% Winners 42% 46% 50% 38% 75% 63%
MDD 2/28/2020 8.42% -- 2/29/2008 3.67% -- 2/29/1996 2.83%
SPX summary for all years 1928 - 2023
Averages -0.09% 0.09% -0.07% 0.00% 0.23% 0.15%
% Winners 45% 54% 54% 52% 64% 61%
MDD 3/2/2009 9.35% -- 2/28/2020 8.42% -- 2/27/1933 6.27%
March
Since 1963, over all years, the OTC in March has been up 64% of the time with an average gain of 0.8%. During the 4th year of the Presidential Cycle March has been up 53% time with an average loss of -1.4%. The best March for the OTC was 2009 (+10.9%), the worst 1980 (-17.1%).
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 March 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 in March has been up 61% of the time with an average gain of 0.6%. During the 4th year of the Presidential Cycle the SPX has been up 67% of the time with an average loss of 0.6%. The best March for the SPX was 1928 (+10.8%) the worst 1938 (-25.0%).
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 March in red and the performance during the 4th year of the Presidential Cycle in green.
Since 1979 the Russell 2000 (R2K) has been up 69% of the time in March with an average gain of 0.7%. During the 4th year of the Presidential Cycle the R2K has been up 64% of the time with an average loss of -3.0%. The best March for the R2K 1979 (+9.7%), the worst 2020 (-21.9%)
The chart below is similar to those above except it shows the daily performance over all years since 1979 of the R2K in March in magenta and the performance during the 4th year of the Presidential Cycle in green.
Since 1885 the Dow Jones Industrial Average (DJIA) has been up 60% of the time in March with an average gain of 0.7%. During the 4th year of the Presidential Cycle the DJIA has been up 65% of the time in March with an average gain of 0.2%. The best March for the DJIA 1920 (+12.6%), the worst 1938 (-23.7%)
The chart below is similar to those above except it shows the daily performance over all years since 1885 of the DJIA in March in blue and the performance during the 4th year of the Presidential Cycle in green.
Conclusion
Breadth deteriorated a little last week as the indices rose to new highs.
The strongest sectors last week were Basic Material and Energy (both on top for the 2nd week in a row) while the weakest were Telecomm and Precious Metals (both on the bottom for the 2nd week in a row).
I expect the major averages to be higher on Friday March 1 than they were on Friday February 23.
Last week the R2K was down while the other indices were up; so I am calling last weeks positive forecast a tie.
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Technical Market Report - Saturday, February 17Technical Market Report - Saturday, February 10
Technical Market Report - Saturday, February 3
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