Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Weekly Stock Market Technical Analysis Report - 28th April 07

Stock-Markets / US Stock Markets Apr 28, 2007 - 01:11 PM GMT

By: Mike_Burk

Stock-Markets

The good news is: All of the major indices hit multi year or all time highs during the past week.

Short Term
The secondaries lead both up and down.


The first chart covers the past 6 months showing the S&P 500 (SPX) in green and the Russell 2000 (R2K) in red. The histogram at the bottom of the chart is a FastTrack relative strength indicator called Accutrack (AT). You can find out more about AT at: http://fasttrack.net/

When the R2K is outperforming the SPX AT moves upward and above the neutral line. Usually, AT turns upward near index lows and downward near index highs. AT turned downward in mid April and was below the 0 line as the indices hit their highs last week, very unusual.

The last similar instance of AT being negative while the indices were hitting new highs was in July 1999. From this point the indices declined about 10% before resuming their upward move.

1999 was also the 3rd year of the Presidential Cycle and the market was manic in its upward move, similar to what we have been seeing for the past 9 months.

There are so few examples of the market hitting new highs while R2K/SPX AT was negative that you cannot be certain of the outcome, but, the short term implications are not positive.

Intermediate term

A healthy market has broad participation.

The chart below covers the past 2 years showing the S&P 500 (SPX) in red and an indicator showing the percentage of the component issues of the SPX that are above their respective 50 EMA's.

You can see how the indicator has deteriorated prior to every significant decline in the index. The current behavior of the indicator looks more like the beginning of an up move than an end.

It is a little disconcerting that the highest percentages of component issues above their 50 day EMA's are found in the blue chip indices.

As of Friday the values for some of the major indices were:

DJIA 88%
OEX 86%
SPX 81%
S&P mid 68%
R2K 63%
S&P small 59%

Seasonality

Next week includes the last trading day of April and the first 4 trading days of May during the 3rd year of the Presidential Cycle.

The tables below show the last trading day of April and first 4 trading days of may for the OTC from 1963 - 2003 during the 3rd year of the Presidential Cycle and the SPX from 1931 - 2003.

There are summaries for both the 3rd year of the Presidential Cycle and all years combined.

Next week has a very positive seasonal bias.

Both the OTC and SPX have been up about 75% of the time with an average gain in excess of 1%.

The number following the year represents its position in the presidential cycle.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.


May

Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC.

The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963.

The charts below show the average daily return for May over all years and during the 3rd year of the Presidential cycle. The number of trading days for the month varies from year to year but average 21. The charts have been constructed by averaging the 1st 11 trading days and the last 10 trading days of the month. If a month had more than 21 trading days some of the days in the middle have not been counted while if the month had more than 21 trading days some of the days in the middle have been counted twice.

The first chart shows the average return of the OTC over all years in orange and the average for the 3rd year of the Presidential Cycle in green.

 

The next chart shows the average return of the SPX over all years in blue and the average for the 3rd year of the Presidential Cycle in green.

Mutual Fund

Compliance issues demand that I not mention the mutual fund that I manage by name or symbol in this letter.

To see a current chart of the fund go to: http://finance.yahoo.com/q/bc?s=APHAX&t=3m

For information about the fund go to: http://www.thealphafunds.com/index.htm

The fund now has service class shares available.

Conclusion

The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong.

I expect the major indices to be higher on Friday May 4 than they were on Friday April 27.

Last weeks negative forecast based on an overbought market with weak seasonal support was a miss.

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


© 2005-2022 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