Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19
The Exponential Stocks Bull Market Explained - Video - 13th Mar 19
TSP Recession Indicator - Criss-Cross, Flip-Flop and Remembering 1966 - 13th Mar 19
Stock Investors Beware The Signs Of Recession / Deflation - 13th Mar 19
Is the Stock Market Still in a Bear Market? - 13th Mar 19
Stock Market Trend Analysis 2019 - 13th Mar 19
Gold Up-to-Date' COT Report: A Maddening Déjà Vu - 12th Mar 19
Save Fintech? Ban Short Selling. It's Not That Simple - 12th Mar 19
Palladium Blowup Could Expose Scam of Gold & Silver Futures - 12th Mar 19
Next Recession: Concentrating Future Losses & Bringing Them Forward In Time As Profits - 12th Mar 19
The Shift of the Philippine Peso Regime - 12th Mar 19
Theresa May BrExit Back Stab Deal Counting Down to Resignation, Tory Leadership Election - 12th Mar 19

Market Oracle FREE Newsletter

Stock and Finanacial Markets Trading Analysis Worth

Stocks Healthy Correction to Continue Next Week

Stock-Markets / US Stock Markets Jun 07, 2008 - 08:30 PM GMT

By: Mike_Burk

Stock-Markets

The good news is: The mid and small cap indices hit new recovery highs last Thursday.

Short Term - Aside from the lack of volume it is difficult to find anything wrong with this market. We expect to see new highs expanding in a rising market and that has been happening.


The chart below covers the past 3 months showing the NASDAQ composite (OTC) in red 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.

During the decline on Monday and Tuesday of last week OTC NH continued to rise suggesting strength which became apparent on Wednesday and Thursday when the OTC and small cap indices rose to new recovery highs. Friday which was down from the open generated enough new highs to keep the indicator nearly flat, a surprising show of strength.

The next chart is similar to the one above except the average in red is the Fidelity Select mutual funds and the new high indicator in green has been calculated on the select funds over the past 6 weeks. In this calculation the new high indicator has been falling since mid May.

An average of the Fidelity Select funds is used by many analysts as a surrogate for the broad market.

Intermediate Term

The secondaries lead both up and down and by that measure the market is looking good.

The chart below covers the past 3 months showing a variety of indices on semi log scales (to reveal their relative performance).

From the March lows the leader has been the S&P mid cap (MID) shown in green followed by the OTC and Russell 2000 (R2K) in blue and magenta.

Leading the way downward are the S&P 500 (SPX) in red and the Dow Jones Industrial Average (DJIA) in black.

We are seeing weakness in the blue chips which may last a little longer, but the strength in the secondaries suggests the resolution will be to the upside.

MID has been rising at a 74% rate for the past 3 months followed by R2K at 58% and OTC at 56%. These rates are unlikely to be sustained.

Seasonality

Next week includes the 5 trading days prior to the second Friday in June during the 4th year of the Presidential Cycle.

The tables show the daily return on a percentage basis for the 5 trading days prior to the second Friday in June during the 4th year of the Presidential Cycle. OTC data covers the period from 1963 - 2007 and SPX data from 1953 - 2007. 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.

During the 4th year of the Presidential Cycle both the OTC and SPX have shown modest average gains while being up a little less than half of the time. Over all years there have been modest losses.

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

OTC Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1964-4 -0.03% -0.46% 0.44% 0.41% 0.13% 0.49%
1968-4 0.38% -0.71% 0.00% 0.21% -0.32% -0.44%
1972-4 -0.58% -0.56% -0.76% 0.05% -0.38% -2.23%
1976-4 -0.60% -0.11% -0.20% 0.41% 0.46% -0.04%
1980-4 0.21% 0.75% 0.69% 0.06% 0.82% 2.54%
1984-4 1.21% -0.13% 0.44% 0.17% 0.19% 1.88%
Avg 0.12% -0.15% 0.05% 0.18% 0.15% 0.34%
1988-4 0.77% -0.11% 1.08% 0.31% 0.43% 2.47%
1992-4 -0.58% -1.41% -0.71% -0.36% 0.32% -2.74%
1996-4 0.02% 0.07% 0.37% -0.79% -1.01% -1.35%
2000-4 0.22% -1.71% 2.21% -0.36% 1.29% 1.65%
2004-4 -1.49% 1.30% 0.13% -0.73% 0.15% -0.64%
Avg -0.21% -0.37% 0.62% -0.38% 0.24% -0.12%
OTC summary for Presidential Year 4 1964 - 2004
Avg -0.04% -0.28% 0.37% -0.06% 0.19% 0.14%
Win% 55% 27% 70% 64% 73% 45%
OTC summary for all years 1963 - 2007
Avg -0.17% -0.21% 0.07% -0.02% 0.07% -0.26%
Win% 51% 29% 57% 64% 62% 38%
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 0.59% 0.02% -0.50% 0.79% -1.85% -0.95%
1960-4 1.17% 0.95% 0.80% 0.19% -0.05% 3.06%
1964-4 -0.48% 0.64% 0.38% 0.37% -0.16% 0.74%
1968-4 0.14% 0.25% 0.00% -0.40% -0.12% -0.14%
1972-4 -0.83% -0.56% -0.52% -0.34% -0.39% -2.64%
1976-4 -0.52% 0.17% -0.06% 0.83% 1.37% 1.78%
1980-4 0.45% 0.84% 1.19% -0.43% 0.25% 2.29%
1984-4 0.72% -0.45% 0.89% -0.06% 0.16% 1.26%
Avg -0.01% 0.05% 0.37% -0.08% 0.25% 0.51%
1988-4 0.23% -0.70% 2.39% -0.49% 0.39% 1.82%
1992-4 -0.03% -0.80% -0.69% 0.44% 0.17% -0.90%
1996-4 -0.17% -0.18% -0.29% -0.17% -0.31% -1.11%
2000-4 -0.66% -0.67% 0.93% -0.66% -0.32% -1.37%
2004-4 -0.98% 0.60% 0.14% -0.13% 0.26% -0.12%
Avg -0.32% -0.35% 0.50% -0.20% 0.04% -0.34%
SPX summary for Presidential Year 4 1956 - 2004
Avg -0.03% 0.01% 0.39% -0.01% -0.05% 0.29%
Win% 46% 54% 58% 38% 46% 46%
SPX summary for all years 1953 - 2007
Avg -0.21% -0.08% 0.05% 0.00% 0.16% -0.07%
Win% 45% 42% 50% 56% 60% 45%

 

Conclusion

The market appears to be in a normal healthy correction with the blue chips leading the way downward.

I expect the major indices to be lower on Friday June 13 than they were on Friday June 6.

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

Gordon Harms produces a Power Point for our local timing group. You can get a copy of that at: http://www.stockmarket-ta.com/ .

Disclaimer: Mike Burk is an employee and principal 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. Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus (qp2.com) and the Wall Street Journal (wsj.com). Historical data is from Barron's and ISI price books. 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.

Mike Burk Archive

© 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