Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

The Stock Markets Repeating Weekly Pattern

Stock-Markets / Stock Index Trading Jun 27, 2009 - 10:05 AM GMT

By: Mike_Burk

Stock-Markets

Best Financial Markets Analysis ArticleThe good news is: NASDAQ new highs surged on Friday to the highest level since last September.


Short Term

Short term, the market is overbought, following very closely the pattern of the past 2 weeks.

The chart below is an update of one I showed last week covering the past 6 months showing the NASDAQ composite (OTC) in blue and an indicator showing the percentage out of the last 3 trading days that the NASDAQ AD line has been up (OTC ADL %UP) in orange. Dashed vertical lines have been drawn on the 1st trading day of each month.

As of Friday's close the OTC ADL has been up for 3 consecutive days, something it has done 6 other times since the early March low. In 3 of the 6 occurrences the OTC ADL went up for 1 more day prior to a short term reversal. The other 3 times the market reversed after the 3rd up day.

On Balance Volume (OBV) is a running total of volume of declining issues subtracted from the volume of advancing issues (similar to an AD line, but calculated from volume).

Similar to the chart above, the next chart shows the OTC in blue and the percentage of the last 3 days that NASDAQ OBV (OTC OBV) has been up. OTC OBV has been up for 4 consecutive days 6 times since the March low and it has not been up more than 4 consecutive days during that time.

As of Friday's close OTC OBV has been up for 4 consecutive days.

Next Monday and/or Tuesday are likely to be down.

Intermediate term

The next chart is also an update of one I showed last week covering the past 6 months showing the OTC in blue and an indicator showing a 40% trend (4day EMA) of the ratio of NASDAQ new highs to new lows. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50% level. The indicator fell on Monday and Tuesday then fully recovered by the end of the week. Nothing really bad is likely to happen as long as the indicator is above the 50% level.

Seasonality

Next week includes the last 2 trading days of June and the first 3 trading days of July during the 1st year of the Presidential Cycle.

The tables show the daily return on a percentage basis for the last 2 trading days of June and the 1st 3 trading days of July during the 1st year of the Presidential Cycle. OTC data covers the period from 1963 - 2008 and S&P 500 (SPX) data from 1928 - 2008. There are summaries for both the 1st year of the Presidential Cycle and all years combined.

OTC returns have been modest over all periods while SPX returns have been robust. SPX returns were strong from 1929 through 1965 (about the beginning of OTC data) and weak since then.

Last 2 days of June and first 3 days of July.
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.

OTC Presidential Year 1
  Day2 Day1 Day1 Day2 Day3 Totals
1965-1 -2.13% 2 0.80% 3 1.80% 4 0.73% 5 0.82% 2 2.03%
 
1969-1 0.23% 5 1.20% 1 0.60% 2 0.60% 3 0.47% 4 3.11%
1973-1 0.94% 4 -0.18% 5 -0.82% 1 -0.70% 2 -0.06% 4 -0.82%
1977-1 0.06% 3 0.39% 4 0.17% 5 0.22% 2 -0.16% 3 0.68%
1981-1 -0.70% 1 -1.13% 2 -0.52% 3 -0.85% 4 -1.74% 1 -4.94%
1985-1 0.66% 4 0.29% 5 0.09% 1 0.15% 2 0.14% 3 1.33%
Avg 0.24% 0.12% -0.09% -0.12% -0.27% -0.13%
 
1989-1 -1.57% 4 -0.60% 5 0.16% 1 0.22% 3 0.60% 4 -1.19%
1993-1 -0.25% 2 0.41% 3 -0.05% 4 0.13% 5 -0.32% 2 -0.09%
1997-1 0.13% 5 0.26% 1 -0.26% 2 1.20% 3 0.82% 4 2.16%
2001-1 2.44% 4 1.65% 5 -0.55% 1 -0.37% 2 -2.83% 4 0.34%
2005-1 -0.05% 3 -0.58% 4 0.02% 5 1.04% 2 -0.49% 3 -0.05%
Avg 0.14% 0.23% -0.13% 0.44% -0.44% 0.24%
 
OTC summary for Presidential Year 1 1965 - 2005
Averages -0.02% 0.23% 0.06% 0.22% -0.25% 0.23%
% Winners 55% 64% 55% 73% 45% 55%
MDD 7/6/1981 4.85% -- 7/5/2001 3.72% -- 6/30/1989 2.16%
 
OTC summary for all years 1963 - 2008
Averages 0.19% 0.23% 0.05% -0.20% 0.02% 0.30%
% Winners 63% 63% 59% 52% 48% 63%
MDD 7/2/2002 7.20% -- 7/3/1974 5.89% -- 7/6/1981 4.85%
 
SPX Presidential Year 1
  Day2 Day1 Day1 Day2 Day3 Totals
1929-1 1.11% 5 0.77% 6 0.54% 1 1.04% 2 0.43% 3 3.89%
1933-1 -0.92% 4 1.58% 5 2.57% 6 3.84% 1 -0.60% 3 6.47%
1937-1 0.13% 2 1.72% 3 0.45% 4 1.49% 5 3.50% 2 7.29%
1941-1 -0.10% 6 -0.30% 1 -0.30% 2 0.71% 3 0.20% 4 0.21%
1945-1 -1.13% 5 0.61% 6 0.47% 1 0.00% 2 -1.13% 4 -1.19%
Avg -0.18% 0.87% 0.75% 1.42% 0.48% 3.33%
 
1949-1 0.64% 3 0.50% 4 0.71% 5 0.56% 2 1.26% 3 3.66%
1953-1 -0.29% 1 0.00% 2 0.41% 3 0.29% 4 0.21% 5 0.62%
1957-1 0.36% 4 0.23% 5 0.13% 1 0.99% 2 1.17% 3 2.88%
1961-1 -0.11% 4 0.19% 5 0.88% 1 0.64% 3 0.27% 4 1.88%
1965-1 0.99% 2 2.07% 3 0.43% 4 0.80% 5 -0.20% 2 4.10%
Avg 0.32% 0.60% 0.51% 0.66% 0.54% 2.63%
 
1969-1 0.08% 5 0.39% 1 0.38% 2 0.88% 3 0.68% 4 2.41%
1973-1 1.03% 4 -0.41% 5 -1.30% 1 -1.00% 2 -0.09% 4 -1.77%
1977-1 -0.03% 3 0.37% 4 -0.38% 5 -0.01% 2 -0.51% 3 -0.56%
1981-1 -0.51% 1 -0.52% 2 -1.10% 3 -0.87% 4 -0.99% 1 -3.98%
1985-1 0.62% 4 0.32% 5 0.30% 1 -0.22% 2 -0.29% 3 0.73%
Avg 0.24% 0.03% -0.42% -0.24% -0.24% -0.63%
 
1989-1 -1.88% 4 -0.53% 5 0.39% 1 0.44% 3 0.28% 4 -1.29%
1993-1 -0.26% 2 -0.04% 3 -0.34% 4 -0.71% 5 -0.99% 2 -2.32%
1997-1 0.41% 5 -0.24% 1 0.66% 2 1.46% 3 1.43% 4 3.72%
2001-1 1.25% 4 0.00% 5 0.86% 1 -0.18% 2 -1.23% 4 0.69%
2005-1 -0.14% 3 -0.71% 4 0.26% 5 0.88% 2 -0.83% 3 -0.54%
Avg -0.12% -0.30% 0.37% 0.38% -0.27% 0.05%
 
SPX summary for Presidential Year 1 1929 - 2005
Averages 0.06% 0.30% 0.30% 0.55% 0.13% 1.34%
% Winners 50% 55% 75% 65% 50% 65%
MDD 7/6/1981 3.92% -- 7/5/1973 2.78% -- 6/30/1989 2.40%
 
SPX summary for all years 1928 - 2008
Averages 0.15% 0.13% 0.31% 0.23% 0.32% 1.12%
% Winners 58% 58% 70% 61% 60% 75%
MDD 6/30/1931 4.32% -- 7/2/2002 4.30% -- 7/6/1981 3.92%

Money supply (M2)

The money supply chart was provided by Gordon Harms. Money supply growth flattened out last week.

July

Since 1963, over all years the OTC in July has been second only to September as the weakest month of the year, up 50% of the time with an average return of -0.2%. However, during the 1st year of the Presidential Cycle July has been the 5th strongest month of the year behind April, October, May and January up 73% of the time with an average gain of 1.9%.

The average month has 21 trading days. The chart below has been calculated by averaging the daily percentage change of the OTC for each of the 1st 11 trading days and each of the last 10. In months when there were more than 21 trading days some of the days in the middle were not counted. In months when there were less than 21 trading days some of the days in the middle of the month were counted twice. Dashed vertical lines have been drawn after the 1st trading day and at 5 trading day intervals after that. The line is solid on the 11th trading day, the dividing point.

The blue line shows the average of the OTC over all years since 1963 while the green line shows the average during the 1st year of the Presidential Cycle.

Since 1928 the SPX has been up 57% of the time in June with an average gain of 1.1% making is the 4th best month of the year. During the 1st year of the Presidential Cycle the SPX has been up 65% of the time with an average gain of 1.6% making it second only to April as the best month of the 1st year of the Presidential Cycle.

The chart below is similar to the one above except it shows the daily performance over all years of the SPX in July in red and the performance during the 1st year of the Presidential Cycle in green.

Conclusion

The market appears poised to repeat the pattern of the past 2 weeks. i.e. weak in the early part of the week and strengthening near the end of the week.

I expect the major indices to be higher on Friday July 3 than they were on Friday June 26.

Last week the blue chip indices were down a little while the NASDAQ and Russell 2000 were up a little so I am calling last weeks positive forecast a tie.

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

6 Critical Money Making Rules