Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Weekly Stock Market Technical Report

Stock-Markets / Forecasts & Technical Analysis Dec 16, 2006 - 04:02 PM GMT

By: Mike_Burk

Stock-Markets

The good news is the Dow Jones Industrial Average closed at another all time high last week while the Wilshire 5000 and S&P 500 (SPX) hit a multi year highs.

Short Term
Momentum of downside volume is an indicator that works pretty well from time to time. The chart below is an update from last week covering the past 6 months showing the NASDAQ composite (OTC) in magenta and momentum of NASDAQ downside volume in green. Dashed vertical grey lines have been drawn on the 1st trading day of each month. The indicator has been plotted on an inverted Y axis so increasing downside volume pushes the indicator downward (up is good).


Since this rally began prices have moved up sharply when the indicator was moving upward and have continued to move upward, but not as quickly when the indicator was moving downward.

Last week the indicator turned upward suggesting this years Santa Clause rally could be a good one.

Intermediate term
The rally off of last summer's lows has been unusual in its persistence.

The chart below shows the SPX in red and momentum of an advance - decline line constructed from new highs and new lows in magenta. New highs and new lows have been calculated on the component issues of the SPX over the trailing 6 weeks rather than 52 weeks as reported by the exchanges.

The indicator began rising last summer and was stuck at the top of the chart for about 3 months until it dropped sharply in late November. It turned back upward last week.

The only other period, in the last 10 years when the indicator remained near the top of the chart for a prolonged period was in late 1996.

The chart below is similar to the one above except it covers the year from March 1996 to March 1997. There are a number of similarities. A rally began in the summer of 1996 and the indicator remained near the top of the chart for about 3 months. The indicator made a sharp decline in mid December then moved upward along with the index for the next 2 months until late February.

The recent decline in this indicator was not as severe as the decline in 1996. If the pattern holds, there should be quite a bit of life left in the old bull.

Seasonality
Next week includes the 5 trading days before Christmas during the 2nd year of the Presidential Cycle. The tables below show the daily performance of the OTC and SPX over that period.

OTC data covers the period from 1966 - 2002 and SPX data from 1954 - 2002 during the 2nd year of the Presidential Cycle. There are summaries for both the 2nd year of the Presidential Cycle and all years combined beginning with 1963 for the OTC and 1953 for the SPX. The OTC has been up about 50% of the time with a very positive bias. The SPX has been up nearly 70% of the time. The last half of the week has been stronger than the first half.

Report for the 5 days before Christmas.
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.


Buy Stocks at $1
OTC Presidential Year 2
  Day5 Day4 Day3 Day2 Day1 Totals
1966-2 0.18% 1 -0.38% 2 0.47% 3 0.84% 4 0.34% 5 1.46%
1970-2 0.28% 5 -0.44% 1 0.12% 2 -0.17% 3 0.13% 4 -0.08%
1974-2 0.74% 3 -0.29% 4 -1.33% 5 -1.38% 1 0.76% 2 -1.49%
1978-2 -2.62% 1 0.35% 2 0.52% 3 0.45% 4 0.93% 5 -0.37%
1982-2 1.48% 5 -0.46% 1 0.28% 2 1.10% 3 0.56% 4 2.96%
Avg 0.01% -0.24% 0.01% 0.17% 0.54% 0.50%
 
1986-2 -0.26% 4 0.24% 5 -0.27% 1 -0.72% 2 0.25% 3 -0.76%
1990-2 1.22% 2 0.28% 3 0.29% 4 0.35% 5 -0.32% 1 1.82%
1994-2 -0.16% 1 0.09% 2 1.22% 3 0.26% 4 0.39% 5 1.79%
1998-2 2.06% 5 2.49% 1 -0.80% 2 2.43% 3 -0.44% 4 5.75%
2002-2 -2.19% 3 -0.54% 4 0.66% 5 1.37% 1 -0.67% 2 -1.38%
Avg 0.13% 0.51% 0.22% 0.74% -0.16% 1.45%
 
OTC summary for Presidential Year 2 1966 - 2002
Averages 0.07% 0.13% 0.12% 0.45% 0.19% 0.97%
%Winners 60% 50% 70% 70% 70% 50%
MDD 12/23/1974 2.97% -- 12/19/2002 2.73% -- 12/18/1978 2.62%
 
OTC summary for all years 1963 - 2005
Averages 0.10% -0.02% -0.10% 0.26% 0.33% 0.57%
% Winners 56% 45% 56% 67% 65% 58%
 
SPX Presidential Year 2
  Day5 Day4 Day3 Day2 Day1 Totals
1954-2 0.26% 5 0.89% 1 0.14% 2 -0.11% 3 0.08% 4 1.26%
1958-2 0.43% 4 -0.15% 5 -0.67% 1 -0.54% 2 1.29% 3 0.36%
1962-2 -0.48% 2 0.82% 3 0.38% 4 -0.29% 5 -0.02% 1 0.42%
 
1966-2 -0.38% 1 -0.38% 2 0.52% 3 0.38% 4 -0.27% 5 -0.13%
1970-2 0.20% 5 -0.31% 1 0.11% 2 0.07% 3 0.57% 4 0.63%
1974-2 0.47% 3 -0.37% 4 -1.09% 5 -1.42% 1 1.39% 2 -1.01%
1978-2 -1.98% 1 0.86% 2 0.47% 3 0.03% 4 1.69% 5 1.06%
1982-2 1.62% 5 -0.89% 1 1.72% 2 0.16% 3 0.64% 4 3.25%
Avg -0.01% -0.22% 0.35% -0.16% 0.80% 0.76%
 
1986-2 -0.32% 4 1.20% 5 -0.39% 1 -0.97% 2 0.17% 3 -0.31%
1990-2 1.24% 2 0.05% 3 -0.02% 4 0.49% 5 -0.56% 1 1.19%
1994-2 -0.19% 1 -0.18% 2 0.55% 3 0.02% 4 0.03% 5 0.23%
1998-2 0.68% 5 1.25% 1 0.07% 2 2.07% 3 -0.18% 4 3.88%
2002-2 -1.31% 3 -0.77% 4 1.30% 5 0.18% 1 -0.55% 2 -1.15%
Avg 0.02% 0.31% 0.30% 0.36% -0.22% 0.77%
 
SPX summary for Presidential Year 2 1954 - 2002
Averages 0.02% 0.15% 0.24% 0.01% 0.33% 0.74%
%Winners 54% 46% 69% 62% 62% 69%
MDD 12/23/1974 2.86% -- 12/19/2002 2.08% -- 12/18/1978 1.98%
 
SPX summary for all years 1952 - 2005
Averages 0.16% 0.01% 0.09% -0.04% 0.27% 0.48%
% Winners 52% 40% 56% 47% 70% 69%

 

Santa Clause is scheduled to arrive Wednesday.

Conclusion
Several short term indicators bottomed last week just in time for the year end rally that should begin next week. I expect the major indices to be higher on Friday December 22 than they were on Friday December 15.

By Mike Burk

To subscribe to this report : http://alphaim.net/signup.html


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules