Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks Oversold Expecting Rally Next Week

Stock-Markets / US Stock Markets May 24, 2008 - 05:06 PM GMT

By: Mike_Burk

Stock-Markets

The good news is: Last weeks decline caused little technical damage.

Short Term The market is over sold. Many of the breadth indicators are at their lowest levels since the March low.


The chart below covers the current year showing the S&P 500 (SPX) in red and an indicator showing momentum of the ratio of NYSE upside to downside volume (up vol / (up vol + dn vol)) in green. Dashed vertical lines have been drawn on the 1st trading day of the month.

This is an extreme example to illustrate the point.

Intermediate Term

New lows picked up a bit last week, but, not enough to generate any more than a modest wiggle in the new low indicators.

The chart below covers the past 6 months showing the NASDAQ composite (OTC) in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in red. OTC NL has been plotted on an inverted Y axis so increasing new low move the indicator downward (up is good).

We like to see volume increase on rallies and decrease on pull backs.

NYSE volume is at its lowest level in over 3 years.

The chart below covers the past 6 months showing the SPX in red and a 5% trend (39 day EMA) in black. The only thing good about this chart is that volume did not pick up during last weeks decline.

There is no evidence to suggest that last weeks decline was any more than a pull back in an advancing market.

Seasonality

Next week includes the last 4 trading days of May during the 4th year of the Presidential Cycle.

The tables show the daily return on a percentage basis for the last 4 trading days of May during the 4th year of the Presidential Cycle. NASDAQ (OTC) data covers the period from 1963 - 2007 and SPX data from 1928 - 2007. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

A big loss in 1932 skews the SPX results negatively, but, by all measures the results are modestly positive.

Last 4 days of May.
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 4
Day4 Day3 Day2 Day1 Totals
1964-4 0.03% 1 -0.28% 2 0.33% 3 0.15% 4 0.23%
1968-4 0.67% 1 0.29% 2 0.46% 3 0.69% 5 2.12%
1972-4 0.25% 4 0.11% 5 -0.37% 2 -0.69% 3 -0.70%
1976-4 -0.39% 2 0.33% 3 -0.36% 4 0.30% 5 -0.12%
1980-4 0.41% 2 0.40% 3 -0.40% 4 0.24% 5 0.65%
1984-4 -0.07% 5 -1.11% 2 -0.29% 3 0.38% 4 -1.09%
Avg 0.18% 0.00% -0.19% 0.18% 0.17%
1988-4 0.16% 3 0.43% 4 -0.17% 5 1.00% 2 1.41%
1992-4 -0.80% 2 0.30% 3 0.54% 4 0.83% 5 0.87%
1996-4 -0.92% 2 -0.87% 3 0.64% 4 0.80% 5 -0.34%
2000-4 -1.99% 4 -0.01% 5 7.94% 2 -1.69% 3 4.24%
2004-4 2.17% 2 0.59% 3 0.42% 4 0.11% 5 3.29%
Avg -0.28% 0.09% 1.88% 0.21% 1.89%
OTC Summary for Presidential Year 4 1964 - 2004
Averages -0.04% 0.02% 0.79% 0.19% 0.96%
% Winners 55% 64% 55% 82% 64%
MDD 5/26/2000 2.00% -- 5/29/1996 1.78% -- 5/30/1984 1.47%
OTC summary for all years 1963 - 2007
Averages -0.04% 0.05% 0.16% 0.26% 0.43%
% Winners 51% 62% 56% 71% 60%
MDD 5/30/2001 8.65% -- 5/27/1970 3.17% -- 5/25/1999 2.97%
SPX Presidential Year 4
Day4 Day3 Day2 Day1 Totals
1928-4 0.15% 5 -1.66% 1 1.28% 2 0.91% 4 0.68%
1932-4 1.59% 4 -5.48% 5 0.41% 6 -7.84% 2 -11.31%
1936-4 1.40% 2 -0.21% 3 -0.83% 4 0.70% 5 1.06%
1940-4 1.41% 1 -2.03% 2 0.65% 3 0.22% 5 0.25%
1944-4 0.16% 5 0.25% 6 0.16% 1 0.65% 3 1.22%
Avg 0.94% -1.83% 0.34% -1.07% -1.62%
1948-4 -0.06% 2 0.91% 3 0.00% 4 0.06% 5 0.91%
1952-4 0.21% 1 -0.25% 2 -0.17% 3 0.08% 4 -0.12%
1956-4 0.04% 5 -1.17% 1 2.29% 2 0.20% 4 1.37%
1960-4 -0.05% 3 0.07% 4 0.05% 5 0.16% 2 0.23%
1964-4 -0.21% 1 -0.21% 2 -0.16% 3 0.14% 4 -0.45%
Avg -0.01% -0.13% 0.40% 0.13% 0.39%
1968-4 -0.16% 1 0.65% 2 0.31% 3 0.78% 5 1.57%
1972-4 0.14% 4 0.18% 5 -0.28% 2 -0.74% 3 -0.71%
1976-4 0.05% 2 -0.15% 3 0.04% 4 0.80% 5 0.74%
1980-4 0.71% 2 0.59% 3 -1.60% 4 0.88% 5 0.58%
1984-4 0.26% 5 -0.88% 2 0.04% 3 0.13% 4 -0.45%
Avg 0.20% 0.08% -0.30% 0.37% 0.35%
1988-4 0.10% 3 0.34% 4 -0.48% 5 3.45% 2 3.42%
1992-4 -0.63% 2 0.18% 3 1.11% 4 -0.33% 5 0.33%
1996-4 -0.93% 2 -0.64% 3 0.57% 4 -0.38% 5 -1.38%
2000-4 -1.26% 4 -0.25% 5 3.23% 2 -0.13% 3 1.58%
2004-4 1.61% 2 0.17% 3 0.57% 4 -0.05% 5 2.30%
Avg -0.22% -0.04% 1.00% 0.51% 1.25%
SPX summary for Presidential Year 4 1928 - 2004
Averages 0.23% -0.48% 0.36% -0.02% 0.09%
% Winners 65% 45% 65% 70% 70%
MDD 5/31/1932 12.52% -- 5/28/1940 2.03% -- 5/28/1928 1.66%
SPX summary for all years 1928 - 2007
Averages 0.05% -0.04% 0.18% 0.04% 0.23%
% Winners 55% 49% 59% 58% 61%
MDD 5/31/1932 12.52% -- 5/28/1962 8.45% -- 5/31/1935 4.49%

 

Conclusion

The market is oversold and seasonally next week has a modestly positive bias.

I expect the major indices to be higher on Friday May 30 than they were on Friday May 23.

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

© 2005-2022 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