Technical Market Report For Saturday, Feb. 27

Technical market report for Feb. 27, 2021

The good news is that the market is due for a bounce (at the least). 

The Negatives

Hints that the era of free money could be winding down sent the market spiraling downward. The decline was led by the secondaries.

The Positives

The market is oversold and the recent index highs were confirmed by the breadth indicators, so there should be new highs for the blue chip indices in the near future.

The first chart covers the past six months, showing the S&P 500 (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 first trading day of each month. The NY NH actually rose last week as prices were declining.

The next chart is similar to the first one, except it shows the NASDAQ composite (OTC) in blue and the OTC NH in green. The information has been calculated with NASDAQ data. After confirming the record OTC high, the OTC NH has been following the index downward.

The next chart covers the past six, months showing the SPX in red, and a 40% trend (four-day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio) in blue. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level. The NY HL Ratio remained well into positive territory at 72%.

The next chart is similar to the one above, except it shows the OTC in blue and the OTC HL Ratio in red. The information has been calculated with NASDAQ data. The OTC HL Ratio fell a little further, but remained positive at 64%.

Seasonality

Next week includes the first five trading days of March during the first 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 2020, while SPX data runs from 1928 to 2020. There are summaries for both the first year of the Presidential Cycle and all years combined. Average returns for the coming week have been positive by all measures.

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