Technical Market Report - Saturday, March 23
The good news is:
The Dow Jones Industrial average (DJIA), S&P 500 (SPX) and Nasdaq composite (OTC) all hit all time highs last Thursday and the Russell 2000 (R2K) hit a multi year high.
The Negatives
The first chart covers the last 6 months showing the 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 the month.
OTC NH did not confirm the new index high.
(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 NH in green has been calculated with NYSE data.
NY NH confirmed the all time SPX high on Thursday implying higher highs ahead.
(Click on image to enlarge)
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 then moved quickly back into positive territory,
(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 also turned upward and finished at a very strong 90%.
(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 upward finishing the week at 109; 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 finished the week at 30 a level that is not threatening.
(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 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.
The NY SI Mom’s all moved downward and than turned back upward 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 then turned decisively upward.
(Click on image to enlarge)
Seasonality
Next week includes the last 4 trading days of March during the 4th year of the Presidential Cycle. The market is closed Friday in observance of Good Friday. 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 modest and mixed.
Report for the last 4 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 4 (PY4)
Day4 Day3 Day2 Day1 Totals
1964-4 -0.37% 3 0.27% 4 0.35% 1 -0.27% 2 -0.02%
1968-4 0.50% 2 0.66% 3 1.18% 4 0.26% 5 2.59%
1972-4 0.01% 1 0.13% 2 -0.15% 3 0.48% 4 0.46%
1976-4 0.24% 5 -0.22% 1 -0.22% 2 0.14% 3 -0.05%
1980-4 -0.23% 3 -6.15% 4 4.16% 5 1.35% 1 -0.86%
Avg 0.03% -1.06% 1.06% 0.39% 0.42%
1984-4 -0.08% 2 0.77% 3 0.25% 4 -0.34% 5 0.60%
1988-4 -0.57% 1 0.69% 2 -0.32% 3 0.77% 4 0.57%
1992-4 -0.66% 4 -1.74% 5 -0.43% 1 0.28% 2 -2.55%
1996-4 0.12% 2 0.51% 3 0.08% 4 0.60% 5 1.31%
2000-4 -2.51% 2 -3.91% 3 -4.02% 4 2.58% 5 -7.87%
Avg -0.74% -0.74% -0.89% 0.78% -1.59%
2004-4 -0.36% 5 1.66% 1 0.40% 2 -0.32% 3 1.38%
2008-4 -0.71% 3 -1.87% 4 -0.86% 5 0.79% 1 -2.65%
2012-4 -0.07% 2 -0.49% 3 -0.31% 4 -0.12% 5 -1.00%
2016-4 -0.14% 1 1.67% 2 0.47% 3 0.01% 4 2.01%
2020-4 5.60% 4 -3.79% 5 3.62% 1 -0.95% 2 4.48%
Avg 0.86% -0.56% 0.66% -0.12% 0.84%
OTC summary for PY4 1964 - 2020
Averages 0.05% -0.79% 0.28% 0.35% -0.11%
% Winners 33% 53% 53% 67% 53%
MDD 3/30/2000 10.10% -- 3/27/1980 6.36% -- 3/27/2020 3.79%
OTC summary for all years 1963 - 2023
Averages 0.18% -0.19% 0.00% 0.18% 0.17%
% Winners 49% 56% 59% 63% 62%
MDD 3/30/2000 10.10% -- 3/29/2001 7.69% -- 3/27/1980 6.36%
SPX PY4
Day4 Day3 Day2 Day1 Totals
1928-4 -0.26% 3 0.32% 4 1.74% 5 -0.78% 6 1.02%
1932-4 -0.39% 1 -0.13% 2 2.11% 3 -5.56% 4 -3.97%
1936-4 -1.53% 5 0.13% 6 -0.20% 1 0.74% 2 -0.85%
1940-4 1.33% 3 -0.25% 4 0.33% 5 0.57% 6 1.99%
1944-4 -0.99% 2 -0.25% 3 0.67% 4 -0.08% 5 -0.66%
1948-4 -0.20% 6 -0.14% 1 1.16% 2 1.41% 3 2.23%
1952-4 0.88% 4 0.79% 5 0.66% 6 0.12% 1 2.46%
1956-4 -0.43% 1 -0.76% 2 0.54% 3 -0.06% 4 -0.71%
1960-4 -0.21% 1 -0.14% 2 -0.22% 3 -0.57% 4 -1.15%
Avg -0.19% -0.10% 0.56% 0.16% 0.43%
1964-4 0.23% 3 0.28% 4 -0.06% 1 -0.20% 2 0.24%
1968-4 0.68% 2 0.82% 3 -0.10% 4 0.70% 5 2.10%
1972-4 -0.20% 1 -0.12% 2 -0.63% 3 0.67% 4 -0.29%
1976-4 0.00% 5 -0.43% 1 -0.39% 2 0.75% 3 -0.07%
1980-4 -0.51% 3 -0.47% 4 2.50% 5 1.40% 1 2.92%
Avg 0.04% 0.02% 0.26% 0.66% 0.98%
1984-4 0.40% 2 1.64% 3 -0.23% 4 -0.21% 5 1.60%
1988-4 -0.17% 1 0.78% 2 -0.77% 3 0.32% 4 0.15%
1992-4 0.08% 4 -1.07% 5 -0.12% 1 0.17% 2 -0.94%
1996-4 0.45% 2 -0.62% 3 0.01% 4 -0.53% 5 -0.70%
2000-4 -1.06% 2 0.05% 3 -1.37% 4 0.72% 5 -1.66%
Avg -0.06% 0.16% -0.50% 0.09% -0.31%
2004-4 -0.10% 5 1.30% 1 0.40% 2 -0.07% 3 1.53%
2008-4 -0.88% 3 -1.15% 4 -0.80% 5 0.57% 1 -2.25%
2012-4 -0.28% 2 -0.49% 3 -0.16% 4 0.37% 5 -0.57%
2016-4 0.05% 1 0.88% 2 0.44% 3 -0.20% 4 1.17%
2020-4 6.24% 4 -3.37% 5 3.35% 1 -1.60% 2 4.62%
Avg 1.01% -0.57% 0.65% -0.19% 0.90%
SPX summary for PY4 1928 + 2020
Averages 0.13% -0.10% 0.37% -0.06% 0.34%
% Winners 38% 42% 50% 54% 50%
MDD 3/31/1932 5.56% -- 3/27/2020 3.37% -- 3/28/2008 2.79%
SPX summary for all years 1928 - 2023
Averages 0.11% -0.07% 0.02% -0.12% -0.06%
% Winners 49% 53% 47% 44% 54%
MDD 3/31/1939 8.42% -- 3/31/1938 8.31% -- 3/31/1933 5.80%
Conclusion
The market had a good week last week, however, the OTC high was not confirmed by the Nasdaq new high indicator and new lows have remained stubbornly high on the Nasdaq. Everything is seashells and balloons on the NYSE as the new SPX high was confirmed by the NYSE new high indicator and new lows have remained comfortably low on the NYSE.
The strongest sectors last week were Basic Material and Energy (For the 6th week in a row), while the weakest were Biotech and Telecomm (for the 2nd week).
I expect the major averages to be higher on Thursday March 28 than they were on Friday March 22.
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