Technical Market Report - Saturday, February 17

By Mike Burk
Saturday, February 17, 2024 10:54 AM EDT

The good news is:

The S&P 500 (SPX) closed at an all time high Thursday and the Russell 2000 (R2K) was the strongest of the major indices last week.

 

The Negatives

The first 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.  Dashed vertical lines have been drawn on the 1st trading day of each month.

NY NH did not confirm the new SPX high.

(Click on image to enlarge)

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

OTC NH deteriorated last week.

(Click on image to enlarge)

 

The Positives

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 remained in 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 has remained quite strong. 

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 continued its upward move in spite of a modest index decline.

(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, near the top of the chart, rose modestly.

(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 next chart covers the past 6 months showing the 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 have not been offering much clarity.

(Click on image to enlarge)

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

NASDAQ SI’s are showing some strength.

(Click on image to enlarge)


Seasonality

Next week includes the 5 trading days prior to the 4th Friday of February 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 modest and mixed.

 

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

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   0.24%   0.37%   0.44%   0.00%   0.57%   1.61%

 1972-4   0.00%  -0.08%   0.25%   0.32%   0.67%   1.16%

 1976-4   0.32%   0.46%   0.39%  -0.69%  -1.30%  -0.83%

 1980-4   0.00%  -0.92%   0.65%  -0.49%  -0.76%  -1.53%

 1984-4   0.00%  -0.55%  -0.32%  -0.83%   1.76%   0.06%

 

 Avg      0.28%  -0.14%   0.28%  -0.42%   0.19%   0.10%

 

 1988-4   0.80%   0.31%   0.57%   0.13%  -0.06%   1.75%

 1992-4  -0.77%  -0.56%   1.77%   0.25%  -0.08%   0.61%

 1996-4   0.00%  -0.69%   1.26%   1.84%   0.06%   2.48%

 2000-4   0.00%  -0.67%   2.00%   1.48%  -0.59%   2.22%

 2004-4  -1.49%  -0.10%   0.87%   0.47%  -0.14%  -0.38%

 

 Avg     -0.49%  -0.34%   1.30%   0.83%  -0.16%   1.34%

 

 2008-4   0.00%  -0.67%   0.91%  -1.17%   0.16%  -0.78%

 2012-4   0.00%  -0.11%  -0.52%   0.81%   0.23%   0.41%

 2016-4   1.47%  -1.47%   0.87%   0.87%   0.18%   1.92%

 2020-4  -2.00%  -2.00%   0.17%  -2.00%   0.01%  -5.82%

 

OTC summary for PY4 1964 - 2020

 Avg     -0.20%  -0.48%   0.66%   0.08%   0.05%   0.21%

 Win%       57%     21%     86%     62%     57%     64%

 

OTC summary for all years 1963 - 2023

 Avg     -0.25%  -0.32%   0.12%   0.05%   0.14%  -0.11%

 Win%       44%     37%     63%     60%     59%     57%


 

SPX PY4

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1956-4  -0.16%   0.25%   0.00%   0.88%   0.82%   1.79%

 1960-4   0.00%  -0.53%  -0.36%   0.34%   0.41%  -0.14%

 

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

 1968-4   0.39%   0.58%   0.45%   0.00%  -0.38%   1.03%

 1972-4   0.00%   0.01%   0.09%   0.07%   0.69%   0.85%

 1976-4  -0.48%   0.41%  -0.33%  -1.55%  -0.40%  -2.35%

 1980-4   0.00%  -0.70%   1.63%  -1.02%  -0.21%  -0.30%

 

 Avg     -0.05%   0.07%   0.46%  -0.84%  -0.07%  -0.19%

 

 1984-4   0.00%  -0.71%  -0.21%  -0.01%   2.00%   1.07%

 1988-4   1.54%  -0.23%  -0.22%  -1.08%   0.34%   0.34%

 1992-4   0.20%  -0.44%   1.19%  -0.36%  -0.28%   0.31%

 1996-4   0.00%  -1.13%   1.16%   1.66%   0.03%   1.73%

 2000-4   0.00%   0.45%   0.63%  -0.54%  -1.48%  -0.93%

 

 Avg      0.87%  -0.41%   0.51%  -0.07%   0.12%   0.50%

 

 2004-4  -0.27%  -0.17%   0.40%   0.11%   0.00%   0.07%

 2008-4   0.00%  -0.09%   0.83%  -1.29%   0.79%   0.25%

 2012-4   0.00%   0.07%  -0.33%   0.43%   0.17%   0.33%

 2016-4   1.45%  -1.25%   0.44%   1.13%  -0.19%   1.59%

 2020-4  -2.00%  -2.00%  -0.38%  -2.00%  -0.82%  -7.20%

 

 Avg     -0.28%  -0.69%   0.19%  -0.32%  -0.01%  -0.99%

 

SPX summary for PY4 1956 - 2020 

 Avg      0.08%  -0.34%   0.33%  -0.22%   0.09%  -0.10%

 Win%       50%     38%     60%     47%     56%     69%

 

SPX summary for all years 1953 - 2023

 Avg     -0.20%  -0.26%   0.11%  -0.08%   0.12%  -0.20%

 Win%       37%     42%     49%     48%     60%     48%

 

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 4.669% up from 4.136%

5yr yield 4.293% up from 3.832%

10yr yield 4.284% up from 3.944% 

30yr yield 4.434% up from 4.177%

All the rates, except the 30 year, 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

Breadth continued to improve last week after the hiccup on Monday.

The strongest sectors last week were Basic Material and Energy (up from the bottom last week) while the weakest were Telecomm and Precious Metals.

I expect the major averages to be higher on Friday February 23 than they were on Friday February 16. 

Last week the R2K was up while the other indices were down; so I am calling last weeks positive forecast a tie.

 

More By This Author:

Technical Market Report - Saturday, February 10
Technical Market Report - Saturday, February 3
Technical Market Report For Saturday, January 27
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.