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

Stock Market Seasonals 60% Probability of Up Week

Stock-Markets / US Stock Markets Aug 17, 2008 - 06:28 AM GMT

By: Mike_Burk

Stock-Markets

The good news is: Most of the indicators suggest a continuation of the advance.

Short Term Advance - decline lines (ADL) are a running total of declining issues subtracted from advancing issues. Their behavior can vary widely and change over time. For example an ADL calculated from issues traded on the NASDAQ (OTC ADL) has had a negative bias while an ADL calculated from issues traded on the NYSE (NY ADL) used to have a negative bias, but, over the past 10 years or so the bias has become very positive.


I calculated an AD line from the issues in the Dow Jones bond indices and found them it to have an extremely positive bias. (Probably because they would increase in value every day until they made their monthly or quarterly dividend payment) The percentage of interest sensitive issues (bond funds, preferred stock, etc.) on the NYSE has been increasing for years. I have seen reports that claim over 50% of the issues traded on the NYSE are interest sensitive.

When an indicator with a negative bias strengthens it offers an important signal of strength.

The chart below covers the past 2 year s showing the NASDAQ composite (OTC) in blue and the OTC ADL in green. Dashed vertical lines have been drawn on the 1st trading day of each month, the lines are red on the 1st trading day of the year.

Over the 2 years shown in the chart the indicator has moved from the upper left of the chart to the lower right with brief periods of strength in late 2006, again during the rally off the lows of last August and for the past month.

Applying a momentum indicator to the OTC ADL makes it easier to identify its periods of strength.

The chart below covers the past year showing the OTC in blue and momentum of the OTC ADL in black. Indicators with a negative bias deteriorate in advance of tops, and, so far, this indicator is showing no sign of a top.

The next chart is similar to the 1st one except is shows the S&P 500 (SPX) in red and the NYSE ADL in green. There is a sharp difference between the OTC ADL and the NYSE ADL. The bias of the NYSE ADL has become so positive that its usefulness has been impaired.

Intermediate Term

On July 15 there were 1304 new lows on the NYSE, an all time record. On that same day the NASDAQ recorded 491 new lows, not a record, but a lot.

There is usually a retest after an extreme number of new lows and there has always been a retest after a record number of new lows. The record number of new lows on July 15 makes a retest of the July low very likely. The retest could easily mark the end of this bear market because the secondaries have been much stronger than the blue chips and the retest is likely to only be in the blue chip indices

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

The next chart shows the relative performance of the major indices since the July 15 low. The Russell 2000 (R2K) has advanced nearly 3 times as much off the July low as the Dow Jones Industrial Average (DJIA) or the SPX and the OTC advance has been nearly double that of the DJIA or SPX.

Seasonality

Next week is the week prior to the 4th Friday in August 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 4th Friday in August during the 4th year of the Presidential Cycle. OTC data covers the period from 1963 - 2007 and SPX data from 1953 - 2007. Prior to 1953 the market traded 6 days a week so that data has been ignored. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

By all measures the market has been up about 60% of the time during the coming week with modest gains. Big losses in the mid 70's make the SPX average over all years modestly negative.

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

OTC Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1964-4 0.56% -0.05% -0.51% 0.12% 0.46% 0.59%
1968-4 0.69% 0.69% 0.00% -0.50% 0.06% 0.94%
1972-4 -0.11% 0.00% -0.14% -0.53% -0.07% -0.85%
1976-4 -0.65% -0.52% 0.47% -0.39% -0.07% -1.17%
1980-4 -1.47% -0.54% 0.79% 1.26% 0.99% 1.03%
1984-4 -0.06% 1.24% 0.21% 0.10% 0.26% 1.75%
Avg -0.32% 0.22% 0.33% -0.01% 0.24% 0.34%
1988-4 -0.98% -0.05% 0.67% -0.53% 0.10% -0.79%
1992-4 -1.47% -0.21% 0.83% 0.80% 0.05% -0.01%
1996-4 -0.25% -0.55% 0.19% 1.53% -0.08% 0.84%
2000-4 0.58% 0.13% 1.33% 1.05% -0.26% 2.84%
2004-4 0.04% -0.10% 1.30% -0.42% 0.49% 1.31%
Avg -0.42% -0.16% 0.86% 0.49% 0.06% 0.84%
OTC summary for Presidential Year 4 1964 - 2004
Avg -0.28% 0.00% 0.51% 0.23% 0.18% 0.59%
Win% 36% 30% 80% 55% 64% 64%
OTC summary for all years 1963 - 2007
Avg -0.07% -0.02% 0.35% -0.12% 0.09% 0.22%
Win% 42% 56% 65% 53% 58% 60%
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 -1.17% -0.75% -0.98% 1.22% -0.10% -1.78%
1960-4 0.32% 0.98% 0.55% -0.48% -0.33% 1.04%
1964-4 -0.19% -0.57% -0.15% 0.47% 0.35% -0.09%
1968-4 0.32% -0.04% 0.00% -0.26% -0.01% 0.01%
1972-4 -0.04% 0.62% -0.13% -1.10% -0.32% -0.97%
1976-4 -0.40% -0.68% 0.75% -0.70% 0.16% -0.86%
1980-4 -1.85% -0.64% 0.95% 1.37% 0.45% 0.27%
1984-4 0.49% 1.75% -0.46% 0.04% 0.23% 2.05%
Avg -0.30% 0.20% 0.28% -0.13% 0.10% 0.10%
1988-4 -1.25% 0.04% 1.57% -0.75% 0.19% -0.19%
1992-4 -1.00% 0.22% 0.46% 0.00% 0.32% 0.00%
1996-4 0.21% -0.14% -0.09% 0.85% -0.55% 0.28%
2000-4 0.52% -0.09% 0.52% 0.16% -0.12% 0.99%
2004-4 -0.24% 0.05% 0.80% 0.01% 0.24% 0.86%
Avg -0.35% 0.02% 0.65% 0.05% 0.02% 0.39%
SPX summary for Presidential Year 4 1956 - 2004
Avg -0.33% 0.06% 0.32% 0.06% 0.04% 0.12%
Win% 38% 46% 58% 62% 54% 62%
SPX summary for all years 1953 - 2007
Avg -0.12% 0.03% 0.19% -0.17% -0.05% -0.13%
Win% 44% 56% 57% 45% 47% 60%

Conclusion

The market remains overbought, especially the secondaries, but there has been no significant deterioration of the indicators and the secondaries have stronger than the blue chips.

I expect the major indices to be higher on Friday August 22 than they were on Friday August 15.

Last week the secondaries were up while the blue chips were down slightly so I am calling last week's positive forecast a tie.

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