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
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
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Markets Consolidating Ahead of Another Leg Higher

Stock-Markets / US Stock Markets Aug 02, 2008 - 05:01 PM GMT

By: Mike_Burk

Stock-Markets

The good news is: The market has been working off its overbought condition about as well as could be hoped for.

Short Term - In 7 trading days following the mid-July lows most of the major indices jumped 5%-6% leaving the market overbought. Since then, it has been working off the overbought condition about as well as could be hoped; new lows declined quickly and the secondaries have been outperforming the blue chips.


The chart below covers the past 3 weeks showing, in order of quality, the Dow Jones Industrial Average (DJIA) in green, the S&P 500 (SPX) in red, The S&P mid cap (MID) in black, the NASDAQ composite (OTC) in blue and the Russell 2000 (R2K) in magenta. The indices have been plotted on log scales so you can see their relative performance. Dashed vertical lines have been drawn on the 1st trading day of each week.

The R2K has been the strongest, followed by the OTC and then MID, SPX and the DJIA at the bottom. It would be nice to see MID a little stronger, but aside from that, this is about as good as it gets.

Intermediate Term

Summation indexes (SI) are a running total of oscillator values, i.e. when the oscillator is above 0 the SI rises and when it is below 0 the SI falls.

The chart below covers this year showing the OTC in blue and SI's calculated from NASDAQ advancing - declining issues in green, new highs - new lows in black and upside - downside volume in red. Dashed vertical lines have been drawn on the 1st trading day of each month.

All of the NASDAQ SI's have been moving sharply upward since the July lows.

The next chart is similar to the one above except the index is the SPX in red and the SI's have been calculated from NYSE data.

Seasonality

Next week is the week prior to the 2nd 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 2nd Friday in August during the 4th year of the Presidential Cycle. NASDAQ composite (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 coming week has had modest gains with the 4th year of the Presidential Cycle slightly stronger than the overall averages.

Report for the week before the 2nd Friday of Aug
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 0.10% 0.17% 0.72% 0.47% 0.12% 1.58%
1968-4 -0.97% 0.40% 0.00% 0.42% -0.08% -0.23%
1972-4 0.02% -0.27% 0.11% 0.07% 0.64% 0.57%
1976-4 -0.34% 0.61% -0.09% 0.09% -0.09% 0.19%
1980-4 -0.35% 0.37% 0.54% 1.03% 0.37% 1.95%
1984-4 1.23% -0.07% -0.43% 0.93% 0.84% 2.50%
Avg -0.08% 0.21% 0.03% 0.51% 0.34% 1.00%
1988-4 -0.01% -0.88% -1.49% 0.16% -0.04% -2.27%
1992-4 -0.10% -0.27% -0.13% 0.02% 0.38% -0.10%
1996-4 -0.39% 0.75% 1.08% -0.32% -0.02% 1.11%
2000-4 2.00% -0.37% 0.13% -2.43% 0.78% 0.11%
2004-4 -0.13% 1.92% -1.45% -1.68% 0.27% -1.07%
Avg 0.27% 0.23% -0.37% -0.85% 0.28% -0.44%
OTC summary for Presidential Year 4 1964 - 2004
Avg 0.10% 0.21% -0.10% -0.11% 0.29% 0.39%
Win% 36% 55% 50% 73% 64% 64%
OTC summary for all years 1963 - 2007
Avg -0.24% 0.07% 0.25% 0.00% 0.00% 0.08%
Win% 42% 56% 64% 64% 47% 60%
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 -1.57% 0.61% 0.41% -0.08% -0.47% -1.10%
1960-4 0.14% 0.58% 0.41% 0.37% 0.68% 2.18%
1964-4 -0.10% -0.02% 0.50% 0.29% -0.07% 0.60%
1968-4 0.23% 0.41% 0.00% -0.22% -0.03% 0.39%
1972-4 0.16% 0.07% 0.15% 0.17% 0.81% 1.37%
1976-4 -0.29% 0.89% -0.34% 0.15% 0.03% 0.45%
1980-4 -0.19% -0.20% 0.67% 1.44% 0.25% 1.97%
1984-4 0.15% 0.07% -0.59% 2.34% -0.07% 1.90%
Avg 0.01% 0.25% -0.03% 0.78% 0.20% 1.22%
1988-4 -0.43% -1.29% -1.72% 0.32% -0.08% -3.20%
1992-4 0.13% -0.12% -0.27% -0.01% 0.52% 0.25%
1996-4 -0.34% 0.33% 0.27% -0.24% -0.07% -0.06%
2000-4 1.12% 0.24% -0.67% -0.86% 0.79% 0.62%
2004-4 0.12% 1.30% -0.30% -1.17% 0.15% 0.09%
Avg 0.12% 0.09% -0.54% -0.39% 0.26% -0.46%
SPX summary for Presidential Year 4 1956 - 2004
Avg -0.07% 0.22% -0.12% 0.19% 0.19% 0.42%
Win% 54% 69% 50% 54% 54% 77%
SPX summary for all years 1953 - 2007
Avg -0.23% 0.14% 0.19% 0.03% 0.03% 0.14%
Win% 40% 62% 54% 49% 53% 58%

 

Money Supply (M2)

The money supply chart was provided by Gordon Harms.

It would be good for the market if the money supply was growing more rapidly.

Conclusion

For the past week or so the market has been consolidating without any major glitches. There should be another leg up, soon.

I expect the major indices to be higher on Friday August 8 than they were on Friday August 1.

Last week the DJIA was down modestly while most of the other major indices were up modestly 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

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments


02 Aug 08, 19:13
stocks

You mean another leg lower!!!


lawrence
02 Aug 08, 23:17
Stocks one trick pony

When you are a one trick pony (in this case, specializing in stock market timing), you're not going to stop beating

a dying pony even if its showing all the signs of imminent death. Just another Wall Street cheerleader.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in