Technical Market Report For April 15, 2017
The good news is:
• The market is oversold and ready for a bounce.
The Negatives
New highs continued to deteriorate, new lows increased a little and the secondaries continue to under perform the blue chips.
The first chart covers the past 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 each month.
OTC NH continued its decline.
The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated with NYSE data.
The pattern is similar to the chart above.
The Positives
New lows increased last week, but remain at non threatening levels.
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.
OTC HL Ratio rose a little last week and held above the neutral line.
The next chart is similar to the one above one except it shows the SPX in red and NY HL Ratio, in blue, has been calculated from NYSE data.
NY HL Ratio fell a bit last week, but finished the week down a little at a very strong 78%.
Seasonality
Next week includes the 5 trading days prior to the 3rd Friday of April during the 1st 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 2016 while SPX data runs from 1953 to 2016. There are summaries for both the 1st 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 mixed and a little weaker during the 1st year of the Presidential Cycle than average.
Report for the week before the 3rd Friday of April.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.
| OTC Presidential Year 1 | ||||||
| Year | Mon | Tue | Wed | Thur | Fri | Totals |
| 1965-1 | 0.30% | 0.16% | 0.12% | -0.06% | 0.28% | 0.79% |
| 1969-1 | 0.55% | -0.89% | 0.08% | 0.50% | -0.19% | 0.06% |
| 1973-1 | -0.99% | -1.58% | -1.67% | 0.32% | -1.20% | -5.13% |
| 1977-1 | -0.09% | -0.07% | 0.27% | -0.56% | -0.73% | -1.19% |
| 1981-1 | 0.42% | -0.38% | 0.35% | 0.24% | 0.71% | 1.34% |
| 1985-1 | -0.35% | 0.00% | 0.44% | 0.32% | 0.06% | 0.47% |
| 1989-1 | 0.02% | 0.71% | 0.28% | -0.09% | 0.53% | 1.45% |
| 1993-1 | -0.56% | -0.16% | 0.31% | -0.08% | -0.77% | -1.26% |
| Avg | -0.11% | 0.02% | 0.33% | -0.03% | -0.04% | 0.16% |
| 1997-1 | 0.79% | -0.29% | -0.21% | 0.56% | 0.45% | 1.30% |
| 2001-1 | -4.81% | -2.07% | 2.14% | -1.21% | 2.01% | -3.95% |
| 2005-1 | -0.36% | 0.67% | -1.55% | -1.40% | -1.98% | -4.62% |
| 2009-1 | -3.88% | 2.22% | 0.14% | 0.37% | 2.55% | 1.39% |
| 2013-1 | -2.38% | 1.50% | -1.84% | -1.20% | 1.25% | -2.66% |
| Avg | -2.13% | 0.40% | -0.26% | -0.57% | 0.86% | -1.71% |
| OTC summary for Presidential Year 1 1965 - 2013 | ||||||
| Avg | -0.87% | -0.02% | -0.09% | -0.18% | 0.23% | -0.92% |
| Win% | 38% | 42% | 69% | 46% | 62% | 54% |
| OTC summary for all years 1963 - 2016 | ||||||
| Avg | -0.39% | 0.32% | 0.27% | 0.25% | 0.15% | 0.61% |
| Win% | 45% | 58% | 70% | 63% | 63% | 69% |
| SPX Presidential Year 1 | ||||||
| Year | Mon | Tue | Wed | Thur | Fri | Totals |
| 1953-1 | 0.45% | -0.24% | -0.85% | -1.10% | 0.04% | -1.71% |
| 1957-1 | 0.15% | 0.37% | 0.15% | -0.35% | -0.13% | 0.20% |
| 1961-1 | 0.47% | -0.72% | -0.59% | 0.02% | -0.08% | -0.90% |
| 1965-1 | 0.41% | -0.06% | -0.18% | 0.54% | 0.11% | 0.83% |
| 1969-1 | -0.67% | 0.22% | 0.02% | 0.47% | 0.44% | 0.48% |
| 1973-1 | -0.53% | -1.42% | -1.50% | 0.51% | -1.52% | -4.47% |
| Avg | -0.04% | -0.32% | -0.42% | 0.24% | -0.24% | -0.77% |
| 1977-1 | -0.49% | -0.47% | 0.33% | -0.65% | -1.31% | -2.59% |
| 1981-1 | 0.56% | -0.90% | -0.07% | -0.15% | 0.90% | 0.34% |
| 1985-1 | -0.23% | 0.65% | 0.21% | 0.64% | -0.68% | 0.60% |
| 1989-1 | 0.12% | 1.43% | 0.37% | -0.31% | 1.12% | 2.72% |
| 1993-1 | -0.33% | -0.53% | -0.33% | -0.94% | -0.55% | -2.68% |
| Avg | -0.07% | 0.04% | 0.10% | -0.28% | -0.11% | -0.32% |
| 1997-1 | 0.82% | 1.48% | 1.17% | -0.23% | 0.60% | 3.84% |
| 2001-1 | -1.50% | -1.22% | 1.59% | 0.47% | 1.50% | 0.85% |
| 2005-1 | 0.00% | 0.55% | -1.18% | -1.00% | -1.67% | -3.29% |
| 2009-1 | -4.28% | 2.13% | -0.77% | 0.99% | 1.68% | -0.25% |
| 2013-1 | -2.30% | 1.43% | -1.43% | -0.67% | 0.88% | -2.08% |
| Avg | -1.45% | 0.87% | -0.12% | -0.09% | 0.60% | -0.19% |
| SPX summary for Presidential Year 1 1953 - 2013 | ||||||
| Avg | -0.46% | 0.17% | -0.19% | -0.11% | 0.08% | -0.51% |
| Win% | 50% | 50% | 44% | 44% | 56% | 50% |
| SPX summary for all years 1953 - 2016 | ||||||
| Avg | -0.15% | 0.31% | 0.09% | 0.11% | -0.03% | 0.33% |
| Win% | 47% | 55% | 59% | 64% | 50% | 66% |
Money supply (M2) and Interest Rates
The following charts were supplied by Gordon Harms. M2 growth took a dive last month.
Interest rates did not move much in the past month.
Conclusion
The breadth indicators continued to deteriorate, but, except for Thursday on the NASDAQ new highs have been outnumbering new lows. The market is a bit oversold right now so it could break either way.
I expect the major averages to be higher on Thursday April 21 than they were on Thursday April 13.
Last weeks positive forecast was a miss.
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