Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21
Scan Computers - How to Test New Systems CPU, GPU and Hard Drive Stability With Free Software - 4th Jun 21
Hedge Funds Getting Bullish on Gold - 4th Jun 21
THERE ARE NO SOLUTIONS When the Media is the VIRUS - 4th Jun 21
Investors Who Blindly Trust the ‘Experts’ Will Get Left Behind - 4th Jun 21
US Stock Market Indexes Consolidate Into Flagging Pattern – Watch For Aggressive Trending Soon - 4th Jun 21
Microsoft (MSFT) Stock Trend Analysis - 3rd Jun 21
No More Market Bloodbath – Beyond Cryptos - 3rd Jun 21
Bank run, or run from the banks? - 3rd Jun 21
This Chart Shows When Gold Stocks Will Explode - 3rd Jun 21
The Meaning Behind Gold’s Triple Top - 2nd Jun 21
Stock Market Breakout Or Breakdown – What Does The Next Big Trend Look Like? - 2nd Jun 21
Biden’s Alternate Inflation Universe - 2nd Jun 21
What You Should Know Before Buying Car Insurance - 2nd Jun 21
Amazon (AMZN) Stock Summer Prime Day Discount Sale - 1st Jun 21
Gold Investor's Survival Guide - 1st Jun 21
Silver and Copper to Benefit from Global Electrification Push - 1st Jun 21
Will Gold Shine Under Bidenomics? - 1st Jun 21
Stock Market Buy the Dip, Again?! - 1st Jun 21
Stock Market Consolidation Ahead - 1st Jun 21
Stock Market Summer Correction Review, Crypto CRASH, Bitcoin Bear Market Initial Targets - 31st May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks Heading towards a Major Top?

Stock-Markets / Stock Index Trading Jul 19, 2009 - 06:34 AM GMT

By: Mike_Burk

Stock-Markets

Best Financial Markets Analysis ArticleThe good news is: The OEX (S&P 100), OTC (NASADAQ composite) and NDX (NASDAQ 100) all closed at multi month highs on Friday.

Short Term - Last week we witnessed a blow off.


The OTC was up 8 consecutive days for the 1st time since May 24, 2005, up 8% over the 8 days. The OEX (the largest 100 issues in the S&P 500) was up 7% last week.

A high for all of the major indices followed by a dip and then a new high for only the blue chip indices is a relatively common topping pattern.

The chart below covers the period from the early June high through last Friday showing the OTC in blue, the S&P 500 (SPX) in red, the Russell 2000 (R2K) in green and the S&P 400 (Mid) in black. The indices are displayed on semi log scales to reflect their relative performance. The OTC is the only one of the indices that has been up since the June high.

It is possible last week marked the resumption of the up trend, but it is overbought by any measure and, for the short term it is likely to decline.

Intermediate term

The next chart is also an update of one I have shown for the past month covering the 100 trading days showing the OTC in blue and an indicator showing a 40% trend (4day EMA) of the ratio of NASDAQ new highs to new lows (NH / (NH + NL)) in blue. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50% level.

The indicator recovered last week. This indicator usually gives a few days warning of a top and although it is at a lower high than in early June the current level is high enough to suggest another index high before a final top in this cycle.

Seasonality

Next week includes the 5 trading days prior to the 4th Friday of July during the 1st year of the Presidential Cycle.

The tables show the daily return on a percentage basis for the 5 trading days prior to the 4th Friday of July during the 1st year of the Presidential Cycle. OTC data covers the period from 1963 - 2008 and SPX data from 1953 - 2008. Prior to 1953 the market traded 6 days a week so that data has been ignored. There are summaries for both the 1st year of the Presidential Cycle and all years combined.

It was pointed out to me there has been a problem with the seasonal data for July. The program that generates the tables looks for Fridays the market traded. When the 4th of July holiday falls on a Friday or Saturday as it did this year there is no trading on the 1st Friday so the program counts the 2nd week as the 1st etc. This week the tables show 0's for the week when the 4th of July fell on a Friday or Saturday.

Over all years the OTC in the coming week has had, on average, modestly negative returns. By all other measures the returns have been modestly positive.

Report for the week before the 4th Friday of July.
The number following the year is the position in the presidential cycle.
Daily returns from Monday through the 4th Friday.

OTC Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1965-1 -1.67% 0.12% -1.20% -0.46% -0.42% -3.63%
 
1969-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1973-1 0.07% 0.50% 0.83% -0.02% 0.17% 1.55%
1977-1 0.59% 0.36% 0.05% 0.26% 0.40% 1.67%
1981-1 0.68% -0.24% 0.02% 0.52% 0.76% 1.74%
1985-1 -0.30% -0.20% -0.82% 0.24% 0.06% -1.02%
Avg 0.26% 0.11% 0.02% 0.25% 0.35% 0.98%
 
1989-1 -0.74% 0.11% 0.59% 0.75% 0.08% 0.79%
1993-1 -0.56% 0.87% -0.26% -0.65% 0.68% 0.08%
1997-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2001-1 -2.01% -1.47% 1.28% 1.95% 0.30% 0.04%
2005-1 -0.55% 1.32% 0.71% -0.46% 0.05% 1.07%
Avg -0.96% 0.21% 0.58% 0.40% 0.28% 0.50%
 
OTC summary for Presidential Year 1 1965 - 2005
Avg -0.50% 0.15% 0.13% 0.24% 0.23% 0.25%
Win% 33% 67% 67% 56% 89% 78%
 
OTC summary for all years 1963 - 2008
Avg -0.35% -0.20% 0.20% -0.05% -0.12% -0.53%
Win% 39% 55% 58% 61% 61% 47%
 
SPX Presidential Year 1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.53% -0.25% 0.12% 0.17% 0.00% -0.49%
1957-1 -0.23% 0.19% 0.10% 0.00% -0.33% -0.27%
1961-1 0.02% 0.55% 0.94% 1.17% 0.15% 2.83%
1965-1 -0.07% -1.26% -0.57% -0.26% 0.26% -1.90%
 
1969-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1973-1 0.35% 0.58% 1.39% 0.19% -0.24% 2.27%
1977-1 0.77% 0.83% -0.06% -0.14% 0.08% 1.48%
1981-1 1.12% -0.59% 0.02% 0.66% 0.70% 1.91%
1985-1 -0.40% -0.93% -0.50% 0.25% 0.18% -1.40%
Avg 0.46% -0.03% 0.21% 0.24% 0.18% 1.07%
 
1989-1 -0.66% 0.06% 1.25% 1.17% 0.05% 1.86%
1993-1 0.06% 0.29% -0.03% -0.60% 0.58% 0.31%
1997-1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2001-1 -1.64% -1.63% 1.61% 1.04% 0.24% -0.37%
2005-1 -0.55% 0.67% 0.48% -0.66% 0.54% 0.48%
Avg -0.70% -0.15% 0.83% 0.24% 0.35% 0.57%
 
SPX summary for Presidential Year 1 1953 - 2005
Avg -0.15% -0.12% 0.39% 0.27% 0.20% 0.56%
Win% 42% 58% 67% 64% 82% 58%
 
SPX summary for all years 1953 - 2008
Avg -0.19% -0.18% 0.38% 0.07% -0.07% 0.02%
Win% 30% 53% 66% 61% 58% 53%

Money supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth continued to deteriorate last week.

Conclusion

A lack of new lows is the only condition missing for a major top.

I expect the major indices to be lower on Friday July 24 than they were on Friday July 17.

Thank you,

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