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
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Downtrend to Continue- No Sign of a Bottom

Stock-Markets / US Stock Markets Mar 08, 2008 - 02:32 PM GMT

By: Mike_Burk

Stock-Markets

The good news is: When this decline is over the market will be setup for an extend rally.

Short Term
After a bottom has been reached downside volume diminishes quickly.


The chart below is an update of one from last week that covers the past year showing the NASDAQ composite (OTC) in blue and a 5% trend (39 day EMA) of NASDAQ downside volume (OTC DV) in black. OTC DV has been plotted on an inverted Y axis so decreasing OTC DV moves the indicator upward (up is good).

There was a sharp decrease in OTC DV after the August low, but not following the January low suggesting there will be more downside movement.

The chart below is similar to the one above except it shows the 2002 bottom. OTC DV had diminished considerably from its July high (low on the chart) when the price low was reached in early October.

OTC DV suggests we are nowhere near a final bottom.

Intermediate Term

New lows offer the best bottom indicator.

Like downside volume, new lows diminish rapidly when a bottom has been reached.

Until last week new lows were falling off suggesting we may be nearing a bottom. On Friday there were 387 new lows on the NASDAQ which now makes another retest likely after we rally from this current decline.

The chart below covers the past year showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in red. Like OTC DV in the chart above OTC NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good).

OTC NL turned sharply downward last week.

Optimists will note the indicator was much higher than it was at the January lows. But the direction is wrong.

Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of March during the 4th year of the Presidential Cycle.

The tables show the daily change of the OTC and S&P 500 (SPX) for the 5 trading days prior to the 2nd Friday in March during the 4th year of the Presidential Cycle. OTC data covers the period from 1964 - 2004 and SPX data from 1956 - 2004. 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.

Historically returns have been modestly negative over the coming week during the 4th year of the Presidential Cycle. By all other seasonal measures the week has been modestly positive.

Report for the week before the 2nd Friday of March
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 0.61% -0.05% 0.32% -0.24% 0.24% 0.88%
1968-4 -0.63% 0.59% -3.92% 1.27% -0.15% -2.84%
1972-4 0.54% -0.04% 0.45% 0.35% -0.23% 1.07%
1976-4 0.56% 0.01% 0.24% 1.12% -0.24% 1.69%
1980-4 -1.67% 0.56% 0.05% 0.24% -0.37% -1.19%
1984-4 -0.66% -0.64% -1.22% 0.20% -0.26% -2.58%
Avg -0.37% 0.10% -0.88% 0.64% -0.25% -0.77%
1988-4 0.32% 0.64% 0.89% -0.93% -0.34% 0.58%
1992-4 -0.02% 1.24% -1.01% -0.20% 0.44% 0.45%
1996-4 -0.11% 1.10% -0.46% 0.12% -2.69% -2.04%
2000-4 -0.20% -1.16% 1.02% 3.06% 0.03% 2.74%
2004-4 -1.90% -0.68% -1.55% -1.03% 2.10% -3.06%
Avg -0.38% 0.23% -0.22% 0.20% -0.09% -0.27%
OTC summary for Presidential Year 4 1964 - 2004
Avg -0.29% 0.14% -0.47% 0.36% -0.13% -0.39%
Win% 36% 55% 55% 64% 36% 55%
OTC summary for all years 1963 - 2007
Avg 0.06% 0.19% -0.01% 0.27% -0.07% 0.44%
Win% 49% 57% 62% 64% 51% 69%
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 0.55% -0.04% -0.07% 0.24% 1.26% 1.93%
1960-4 -1.01% -1.02% 1.07% -0.39% 0.76% -0.59%
1964-4 0.03% 0.33% 0.46% 0.16% 0.08% 1.06%
1968-4 -1.34% -0.23% 1.76% -0.18% -0.08% -0.07%
1972-4 0.77% 0.09% 0.08% -0.02% -0.52% 0.40%
1976-4 1.09% 0.39% 0.36% 0.94% -1.01% 1.77%
1980-4 -0.36% 1.19% -0.84% -1.17% -0.18% -1.37%
1984-4 -0.85% -1.04% -1.08% 0.40% -0.54% -3.10%
Avg -0.14% 0.08% 0.06% 0.00% -0.47% -0.47%
1988-4 0.03% 0.77% -0.14% -1.94% 0.42% -0.86%
1992-4 0.19% 0.41% -0.70% -0.03% 0.48% 0.35%
1996-4 1.00% 0.77% -0.58% 0.25% -3.08% -1.64%
2000-4 -1.27% -2.57% 0.82% 2.56% -0.47% -0.93%
2004-4 -0.84% -0.58% -1.46% -1.52% 1.25% -3.15%
Avg -0.18% -0.24% -0.41% -0.14% -0.28% -1.25%
SPX summary for Presidential Year 4 1956 - 2004
Avg -0.15% -0.12% -0.03% -0.05% -0.13% -0.48%
Win% 54% 54% 46% 46% 46% 38%
SPX summary for all years 1953 - 2007
Avg 0.01% 0.09% 0.06% 0.12% -0.05% 0.23%
Win% 56% 55% 55% 59% 44% 60%

 

Conclusion

The market is over sold so we are due for a rally, but, there are no signs of a bottom and seasonally the strongest part of March is over.

I expect the major indices to be lower on Friday March 14 than they were on Friday March 7.

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