Technical Market Report - Saturday, March 15

The good news is

  • The recent index highs were confirmed by the new high indicators implying more new highs ahead.

 

The Negatives

Summation indices are running totals of oscillator values.

Short term momentum indicators applied to summation indices make them nearly binary.

The first chart covers the past 6 months showing the S&P 500 (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.  Dashed vertical lines have been drawn of the 1st trading day of each month. 

The NY SI Mom’s all turned downward last week.

(Click on image to enlarge)

The next chart is similar to the one above; except it shows the NASDAQ composite (OTC), in blue and the SI’s have been generated from NASDAQ breadth data.  

NASDAQ SI’s all moved decisively 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 took a dive into negative territory Friday,

(Click on image to enlarge)

 

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 ratio also took a dive, but finished the week comfortably positive. 

(Click on image to enlarge)

The next 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.  

NY NH confirmed the all time SPX high on implying higher highs ahead.

(Click on image to enlarge)

The next chart is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH, in green, has been calculated with NASDAQ data.

OTC NH also confirmed the index high Implying another record high ahead.  

(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 downward finishing the week at 117; an uncomfortably high value.

(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.

NY NL turned slightly downward, but at 32 the level is not threatening.

(Click on image to enlarge)


 

Seasonality

Next week includes the 5 trading days prior to the 4th Friday 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 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 mixed.  The 4th year returns were strengthened by a really good week in 2020.

 

Report for the week before the 4th Friday of March.

The number following the year is the position in the Presidential Cycle.

Daily returns from Monday through the 4th Friday.

 

OTC Presidential Year 4 (PY4)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1964-4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 

 Avg      0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 

 1968-4   1.08%  -0.05%  -0.36%   0.46%  -0.40%   0.73%

 1972-4  -0.37%  -1.41%   0.50%   0.81%   0.13%  -0.34%

 1976-4   0.17%   0.75%   0.63%  -0.29%   0.24%   1.50%

 1980-4  -3.02%  -1.55%  -0.23%  -6.15%   4.16%  -6.79%

 1984-4  -0.68%   0.43%  -0.10%  -0.68%  -0.32%  -1.34%

 

 Avg     -0.56%  -0.37%   0.09%  -1.17%   0.76%  -1.25%

 

 1988-4  -0.79%   0.31%   0.09%  -1.18%  -0.81%  -2.38%

 1992-4  -0.39%  -0.51%   0.13%  -0.66%  -1.74%  -3.17%

 1996-4   1.35%  -0.17%  -0.96%  -0.18%   0.22%   0.25%

 2000-4  -3.92%   2.21%   3.25%   1.56%   0.45%   3.55%

 2004-4  -1.58%  -0.42%   0.40%   3.02%  -0.36%   1.06%

 

 Avg     -1.07%   0.28%   0.58%   0.51%  -0.45%  -0.14%

 

 2008-4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 2012-4   0.75%  -0.14%   0.04%  -0.39%   0.15%   0.42%

 2016-4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 2020-4  -0.27%   8.12%  -0.45%   5.60%  -3.79%   9.21%

 

OTC summary for PY4 1964 - 2020

 Avg     -0.64%   0.63%   0.24%   0.16%  -0.17%   0.22%

 Win%       33%     42%     58%     42%     50%     58%

 

OTC summary for all years 1963 - 2023

 Avg     -0.01%   0.00%  -0.03%   0.29%  -0.10%   0.15%

 Win%       51%     45%     49%     57%     53%     55%


 

SPX PY4

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1956-4  -0.04%   0.00%   0.22%   0.08%  -0.81%  -0.55%

 1960-4  -0.62%   0.00%  -0.16%  -0.92%  -0.69%  -2.39%

 

 1964-4  -0.46%  -0.28%   0.08%   0.21%   0.11%  -0.33%

 1968-4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 1972-4   1.18%  -0.30%  -0.07%  -0.23%   0.09%   0.68%

 1976-4  -0.37%  -0.55%   0.10%   0.11%   0.13%  -0.59%

 1980-4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 

 Avg      0.12%  -0.37%   0.04%   0.03%   0.11%  -0.08%

 

 1984-4  -0.40%  -0.76%   0.68%   0.84%   0.74%   1.10%

 1988-4  -0.57%  -0.75%   0.57%  -1.24%  -1.19%  -3.17%

 1992-4  -0.01%   1.45%   1.13%   0.40%   0.07%   3.04%

 1996-4  -0.78%  -1.09%  -0.04%   0.72%   0.75%  -0.43%

 2000-4  -1.07%   0.69%  -1.50%  -0.19%  -2.05%  -4.12%

 

 Avg     -0.57%  -0.09%   0.17%   0.11%  -0.34%  -0.72%

 

 2004-4  -0.04%   0.71%  -1.33%   0.27%  -0.97%  -1.37%

 2008-4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 2012-4  -0.89%  -0.90%  -0.03%   1.65%   1.91%   1.74%

 2016-4   0.24%  -0.14%   0.43%  -0.36%   0.46%   0.62%

 2020-4   0.74%  -0.65%   1.24%  -0.38%   0.77%   1.73%

 

 Avg      0.01%  -0.25%   0.08%   0.30%   0.54%   0.68%

 

SPX summary for PY4 1956 - 2020 

 Avg     -0.22%  -0.21%   0.10%   0.07%  -0.05%  -0.29%

 Win%       21%     25%     57%     57%     64%     43%

 

SPX summary for all years 1953 - 2023

 Avg     -0.18%   0.00%   0.34%   0.15%   0.03%   0.34%

 Win%       36%     56%     64%     60%     61%     61%

 

Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms.

The first chart, made with FastTrack, covers the past 4 years showing the SPX in red and M2 money supply in green.

Money supply has remained constant for several months.

(Click on image to enlarge)

Treasury rates at their close last Friday and their changes from last month:

2yr yield 4.736% up from 4.669%

5yr yield 4.326% up from 4.293%

10yr yield 4.318% up from 4.284% 

30yr yield 4.431% down from 4.434%

All the rates are inverted (shorter term maturities yield more than longer term maturities) relative to the 2 year.

The next chart covers the past 15 months showing the 30 year yield over the 5 year yield on top, The 1, 2, 5, 10 & 30 year treasury rates in the middle group and the SPX with a 50 day simple moving average on the bottom.

(Click on image to enlarge)

 

Conclusion

The market had a bad week last week, however, the highs of the previous week were confirmed implying higher highs ahead..

The strongest sectors last week were Precious Metals (for the 2nd week) and Energy (For the 5th week in a row) while the weakest were Internet and Telecomm.

I expect the major averages to be higher on Friday March 22 than they were on Friday March 15. 

Last weeks positive forecast was a miss.

 


More By This Author:

Technical Market Report - Saturday, March 9
Technical Market Report - Saturday, March 2
Technical Market Report - Saturday, February 24

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