Technical Market Report For Saturday, Sept. 25

Technical Market Report for Saturday, Sept. 25, 2021

The good news is that the market had a pretty good week after its Evergrande tantrum on Monday. All of the major indices were up at the end of the week.

The Negatives

Breadth has left something to be desired. It has been bad, but not awful.

The first chart covers the past six months, showing the Nasdaq composite (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 first trading day of each month. The OTC NH continued its fall.

The next chart is similar to the first one, except it shows the SPX in red and the NY NH in green. The NY NH information has been calculated with NYSE data. Similar action was seen in the NY NH.

Leadership continues to narrow.

The Positives

New lows, like everything else, had a bad day last Monday and spent the rest of the week recovering.

The next chart covers the past six months, showing the OTC in blue and a 10% trend (19-day EMA) of Nasdaq new lows (OTC NL) in brown. The OTC NL has been plotted on an inverted Y axis, so decreasing numbers of new lows move the indicator upward (up is good). The OTC NL’s recovery began after Monday.

The next chart is similar to the one above, except is shows the SPX in red and the NY NL in blue. The NY NL information has been calculated with NYSE data. Similar action was seen in the NY NL.

The next chart covers the past six months, showing the OTC in blue, and a 40% trend (four-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. The OTC HL Ratio managed to finish the week in positive territory.

The next chart is similar to the previous one except it shows the SPX in red and the NY HL Ratio in blue. The NY HL Ration information has been calculated with NYSE data. The NY HL Ratio also recovered to positive territory after Monday. 

Seasonality

Next week includes the last four trading days of September and the first trading day of October, all 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. Prior to 1953 the market traded six days a week, so that data has been ignored.

Average returns for the coming week have been mixed and stronger during the first year of the Presidential Cycle than other years. 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 1 (PY1)

   Year           Day 5       Day 4       Day 3       Day 2       Day 1      Totals

 1965-1       0.09% 1   0.19% 2   0.07% 3  -0.88% 4  -0.06% 5    -0.58%

 1969-1      -0.17% 4  -0.27% 5  -0.36% 1  -0.39% 2   0.42% 3    -0.78%

 1973-1       0.10% 2   0.75% 3   0.59% 4  -0.06% 5  -0.21% 1     1.16%

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