Technical Market Report For Saturday, Aug. 28

MDD 8/31/1998  8.16% --  9/4/1946  7.76% --  9/3/1931  5.32%

September

Since 1963, over all years, the OTC in September has been up 59% of the time and has, on average, had a loss of 0.1% for the month.  During the 1st year of the Presidential Cycle September has been up 71% time with an average gain of (+0.4%).  The best September ever for the OTC was 1998 (+13.0%), the worst 2001 (-17.0%).

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 September over all years since 1963 while the green line shows the average during the 1st year of the Presidential Cycle over the same period.

Since 1928 the SPX has been up 46% of the time in September with an average loss of (-1.0%).  During the 1st year of the Presidential Cycle the SPX has been up 43% of the time with an average loss of (-1.4%).  The best September ever for the SPX was 1939 (+16.5%) the worst 1931 (-29.9%).

The chart below is similar to the one above except it shows the average daily performance over all years for the SPX in September in red and the performance during the 1st year of the Presidential Cycle in green.

Since 1979 the Russell 2000 (R2K) has been up 55% of the time in September with an average loss of (-0.4%).  During the 1st year of the Presidential Cycle the R2K has been up 70% of the time and, on average, been flat for the month.  The best September ever for the R2K, 2010 (+12.3%), the worst 2001 (-13.6%)

The chart below is similar to those above except it shows the daily performance over all years of the R2K in September in magenta and the performance during the 1st year of the Presidential Cycle in green.

Since 1885 the DJIA has been up 44% of the time in September with an average loss of (-0.9%).  During the 1st year of the Presidential Cycle the DJIA has been up 53% of the time in September with an average loss of (-1.0%).  The best September ever for the DJIA, 1939 (+13.5%), the worst 1930 -30.7%.

The chart below is similar to those above except it shows the daily performance over all years of the DJIA in September in cyan and the performance during the 1st year of the Presidential Cycle in grey.

Conclusion

New low numbers declined sharply last week and the secondaries outperformed the blue chips.

It looks like a bottom has been put in, lets hope it holds.

The strongest sectors last week were Banks and Electronics while the weakest were Utilities (back down from the top last week) and Biotech.

I expect the major averages to be higher on Friday September 3 than they were on Friday August 27.

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Comments

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Sven 1 month ago Member's comment

Down we go in the index next week i belive?

VIX up with power 

Mike Burk 1 month ago Author's comment

Not likely as long as new lows are declining.