Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Weekly Stock Market Technical Analysis Report - 3rd Feb 07

Stock-Markets / Forecasts & Technical Analysis Feb 03, 2007 - 03:21 PM GMT

By: Mike_Burk

Stock-Markets

The good news is:
Last week most of the major indices hit new multiyear or all time highs.

Short Term
In April 2004 the Russell 2000 (R2K) topped after moving upward for 8 consecutive days. After that high it fell 14.7% to its August 13 low. That is the only example I would find where the index made a significant top concluding with 6 or more consecutive up days. On average the R2K moves upward for 6 or more consecutive days about twice a year and those moves are usually in the midst of a larger upward move.


The chart below covers the past year showing the R2K in orange and an indicator showing the percentage of the last 6 trading days that were up in black. The indicator touches the top of the chart when there have been 6 or more consecutive up days and it touches the bottom of the chart when there have been 6 or more consecutive down days.

The indicator hit the top of the screen as of Friday indicating a short term overbought condition and suggesting a pull back for the next few days, but the longer term implications are positive.

Weekly Stock Market Technical Analysis Report - 20th Jan 07

Intermediate term
The secondaries lead both up and down or, at least, have higher betas. The chart below shows the R2K in red, the S&P 500 (SPX) in green and a FastTrack relative strength indicator called Accutrack (AT) as a histogram in yellow.

AT moves upward and holds above the neutral line when the R2K is outperforming the SPX.

AT bottomed about 2 weeks ago and crossed from below to above the 0 line about a week ago.

the R2K in red, the S&P 500 (SPX) in green and a FastTrack relative strength indicator called Accutrack

You can learn more about accutrack at: http://fasttrack.net/

Seasonality
Next week is the week before the 2nd Friday in February during the 3rd year of the Presidential Cycle.

In the tables below, OTC data covers the period from 1963 - 2003 and S&P 500 (SPX) data from 1955 - 2003 during the 3rd year of the Presidential Cycle. There are summaries for both the 3rd year of the Presidential Cycle and all years combined beginning with 1963 for the OTC and 1953 for the SPX. Data prior to 1953 has been omitted because the market traded 6 days a week.

Next week has been a strong week. The OTC has been up 73% of the time since 1963 and the SPX up 85% of the time. The 3rd year has been much stronger than the averages for all years. Over all years the OTC has been up 59% of the time and the SPX 56% of the time.

Report for the week before the 2nd Friday during Feb
The number following the year is the position in the presidential cycle.
Daily returns from Monday to 2nd Friday.

OTC Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1963-3 -0.42% -0.03% -0.03% 0.42% -0.93% -1.00%
1967-3 0.21% 0.31% -0.13% 0.95% 0.83% 2.16%
1971-3 0.84% -0.08% -0.07% 0.75% 0.59% 2.04%
1975-3 -0.42% 0.01% 1.07% 1.80% 0.52% 2.99%
1979-3 -1.18% -0.02% -1.21% 0.50% 0.28% -1.63%
1983-3 0.15% -0.37% 0.11% 1.35% 0.73% 1.98%
1987-3 -0.28% -0.56% 0.62% 0.78% 0.81% 1.37%
Avg -0.18% -0.20% 0.10% 1.04% 0.59% 1.35%
1991-3 1.70% 1.74% 1.63% -0.96% 0.41% 4.52%
1995-3 0.88% 0.02% 0.62% 0.21% 0.64% 2.36%
1999-3 1.32% -3.91% -0.06% 4.16% -3.48% -1.97%
2003-3 1.11% -0.09% -1.27% -0.12% 2.56% 2.18%
Avg 1.25% -0.56% 0.23% 0.82% 0.03% 1.77%
OTC summary for Presidential Year 3 1963 - 2003
Avg 0.36% -0.27% 0.12% 0.89% 0.27% 1.36%
Win% 64% 36% 45% 82% 82% 73%
OTC summary for all years 1963 - 2006
Avg -0.05% 0.02% 0.09% 0.23% -0.05% 0.24%
Win% 42% 52% 57% 68% 56% 59%
SPX Presidential Year 3
Year Mon Tue Wed Thur Fri Totals
1955-3 4.68% -5.14% -0.33% 0.19% 0.14% -0.46%
1959-3 0.15% -0.39% 0.39% 0.95% 0.91% 2.01%
1963-3 -0.62% 0.11% 0.49% 0.30% 0.09% 0.37%
1967-3 0.10% 0.67% 0.11% -0.46% 0.03% 0.46%
1971-3 0.00% 0.23% -0.47% -0.65% -0.84% -1.72%
1975-3 0.00% -0.70% 0.63% 0.95% 0.50% 1.37%
1979-3 0.34% 0.74% -0.06% -0.14% -0.06% 0.82%
1983-3 0.87% -0.42% -0.59% 0.01% 0.38% 0.26%
1987-3 0.00% 2.07% -0.02% 0.05% -0.03% 2.07%
Avg 0.61% 0.39% -0.10% 0.04% -0.01% 0.56%
1991-3 2.57% -0.84% 0.96% -1.30% 1.33% 2.72%
1995-3 0.04% 0.19% 0.41% 0.14% -0.67% 0.11%
1999-3 0.00% 0.96% -1.44% 1.09% 0.15% 0.76%
2003-3 0.00% 1.95% -0.71% -0.95% 1.32% 1.61%
Avg 1.30% 0.57% -0.19% -0.26% 0.53% 1.30%
SPX summary for Presidential Year 3 1955- 2003
Avg 1.02% -0.04% -0.05% 0.01% 0.25% 0.80%
Win% 88% 62% 46% 62% 69% 85%
SPX summary for all years 1953 - 2006
Avg 0.04% -0.03% 0.15% -0.03% 0.02% 0.15%
Win% 45% 53% 57% 46% 46% 56%

 

February
The OTC has been up 56% of all Februarys since 1963 with an average gain of 0.3%. However, during the 3rd year of the Presidential Cycle the OTC has been up 75% of the time with an average gain of 2.1%.

The SPX has been up 54% of all Februarys since 1928 with an average loss of -0.2%. However, during the 3rd year of the Presidential Cycle the SPX has been up 70% of the time with an average gain of 1.3%.

The chart below plots the average daily return of the OTC over all years in magenta and during the 3rd year of the Presidential Cycle in blue.

The average month has 21 trading days and the chart has been constructed by averaging the performance of the first 11 trading days and the last 10 trading days. A solid line has been drawn on the dividing point, the eleventh day. This methodology usually offers a pretty accurate picture of the average month, however, February usually has 19 trading days so two days in the middle of the month have been counted twice. You can see it in the chart, the two days before and after the dividing point are identical, they are also two of the strongest days of the month making the month look a little stronger than it really has been.

average daily return of the OTC over all years in magenta and during the 3rd year of the Presidential Cycle in blue

The next chart is similar to the one above except it shows the SPX.

The next chart is similar to the one above except it shows the SPX.

The Alpha Fund (APHAX)
The Alpha Fund, which I manage, opened last October. The funds web site became operational last week. Beginning this week, I will be reporting the weekly and year to date performance of the fund.

Last week YTD
APHAX +1.8% +2.7% - For information about the fund go to: http://www.thealphafunds.com/index.htm

Conclusion
The market is overbought, but, seasonality is positive and none of the breadth indicators is suggesting a reversal. I expect the major indices to be higher on Friday February 9 than they were on Friday February 2.

By Mike Burke

Mike Burk is an employee and principle of Alpha Investment Management (Alpha) a registered investment advisor. Charts and figures presented herein are believed to be reliable but we cannot attest to their accuracy. The views expressed are provided for information purposes only and should not be construed in any way as investment advice. Furthermore, the opinions expressed may change without notice. 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