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
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 Market Technicals Point to Strong Rally

Stock-Markets / US Stock Markets Nov 22, 2008 - 06:42 PM GMT

By: Mike_Burk

Stock-Markets

Best Financial Markets Analysis ArticleThe good news is: In the 1930's, the last time we saw declines of this magnitude in the same time frame, the rallies that followed took the S&P 500 (SPX) up 20% - 46%.

Short Term As of Thursday's close the SPX was down over 40% in less than 3 months, a rare occurrence. From its August 87 high to its October crash low the SPX was down 33.2%. Late 1937 was the last time the SPX fell more than 40% in 3 months, 71 years ago.


The charts below show every example of the SPX falling more than 40% in 3 months or less since 1928. Dashed vertical lines have been drawn on the 1st trading day of each month. The 1st chart shows the current period as of last Friday, all of the others include a month or so after the bottom so you can see the nature of the rally that followed the low.

The 1937 low occurred in late November, the pattern and time frame are similar to what we have recently experienced.

The next chart shows the bear market low of June 1, 1932, the SPX was 86.2% off its 1929 high.

The SPX hit a low in early October 1931 then rallied 30.6% in a little over a month. The chart ends at the rally high.

The SPX hit its crash low in November 1929 then rallied 46% in the next 5 months.

I found no examples of the SPX falling more than 50% in 3 months so there is hope for a rally.

Intermediate term

There were 1514 new lows on the NASDAQ October 10.
There were 788 new lows on the NASDAQ on October 24.
There were 664 new lows on the NASDAQ on November 13.
There were 1158 new lows on the NASDAQ on November 20.

I do not have a magic number for new lows that would mark the bottom on a retest, but, anything over 400 makes me uncomfortable. 1158 new lows on the NASDAQ last Thursday suggest the bear market lows have yet to be seen.

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

The indicator turned sharply downward last week, but is still above its October lows.

New highs and new lows began being calculated in their present form in 1978 so their usefulness is limited to the last 30 years.

Our most recent bear market 2000 - 2002 is shown in the chart below.

The chart covers 3 years and the index and indicator are the same as in the chart above.

There were 434 new lows on the NASDAQ at the October 9, 2002 low. The highest number of NASDAQ new lows during the 2000 - 2002 bear market was 788 on December 21, 2000 (same as October 24 this year).

Seasonality

Next week is the week of Thanksgiving during the 4th year of the Presidential Cycle.

The tables show the daily return on a percentage basis for week of Thanksgiving during the 4th year of the Presidential Cycle. OTC data covers the period from 1963 - 2007 and SPX data from 1953 - 2007. There are summaries for both the 4th year of the Presidential Cycle and all years combined. Prior to 1953 the market traded 6 days a week so that data has been ignored.

The averages, over all periods, have been pretty strong and the 4th year of the Presidential Cycle has been stronger than the average of all years.

Report for 3 days before Thanksgiving and 1 day after. Day1 = the day after
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 -0.16% 1 -0.40% 2 -0.18% 3 -0.16% 5 -0.90%
1968-4 0.47% 1 0.20% 2 1.52% 3 0.68% 5 2.86%
1972-4 -0.16% 1 0.05% 2 0.23% 3 0.40% 5 0.52%
1976-4 0.56% 1 -0.28% 2 0.52% 3 0.80% 5 1.61%
1980-4 -0.90% 1 0.58% 2 0.80% 3 0.53% 5 1.01%
1984-4 -0.91% 1 0.07% 2 -0.01% 3 1.00% 5 0.14%
Avg -0.19% 0.12% 0.61% 0.68% 1.23%
1988-4 -0.68% 1 0.08% 2 0.66% 3 -0.38% 5 -0.32%
1992-4 -0.59% 1 1.11% 2 0.37% 3 0.18% 5 1.08%
1996-4 0.47% 1 0.06% 2 0.48% 3 0.41% 5 1.42%
2000-4 -5.01% 1 -0.14% 2 -4.05% 3 5.41% 5 -3.79%
2004-4 0.70% 1 -0.04% 2 0.88% 3 -0.03% 5 1.51%
Avg -1.02% 0.21% -0.33% 1.12% -0.02%
OTC summary for Presidential Year 4 1964 - 2004
Averages -0.56% 0.12% 0.11% 0.80% 0.47%
%Winners 36% 64% 73% 73% 73%
MDD 11/22/2000 8.98% -- 11/19/1984 .91% -- 11/24/1980 .90%
OTC summary for all years 1963 - 2007
Averages -0.26% -0.18% 0.28% 0.55% 0.40%
% Winners 44% 55% 76% 84% 64%
SPX Presidential Year 4
Day4 Day3 Day2 Day1 Totals
1952-4 0.59% 1 -0.24% 2 0.63% 3 0.55% 5 1.54%
1956-4 -0.98% 1 -0.88% 2 -0.49% 3 1.05% 5 -1.30%
1960-4 0.20% 1 -0.38% 2 0.14% 3 0.59% 5 0.56%
1964-4 -0.32% 1 -0.31% 2 -0.34% 3 -0.33% 5 -1.30%
1968-4 0.17% 1 0.73% 2 0.47% 3 0.57% 5 1.93%
1972-4 0.03% 1 0.59% 2 0.59% 3 0.32% 5 1.53%
1976-4 0.66% 1 -0.61% 2 0.44% 3 0.72% 5 1.21%
1980-4 -0.58% 1 0.74% 2 0.60% 3 0.25% 5 1.01%
1984-4 -0.61% 1 0.66% 2 0.21% 3 1.46% 5 1.72%
Avg -0.06% 0.42% 0.46% 0.66% 1.48%
1988-4 -0.09% 1 0.37% 2 0.67% 3 -0.66% 5 0.29%
1992-4 -0.36% 1 0.58% 2 0.37% 3 0.23% 5 0.82%
1996-4 1.11% 1 -0.14% 2 -0.12% 3 0.27% 5 1.11%
2000-4 -1.84% 1 0.35% 2 -1.85% 3 1.47% 5 -1.87%
2004-4 0.59% 1 -0.03% 2 0.41% 3 0.08% 5 1.05%
Avg -0.12% 0.23% -0.11% 0.28% 0.28%
SPX summary for Presidential Year 4 1952 - 2004
Averages -0.10% 0.10% 0.12% 0.47% 0.59%
%Winners 50% 50% 71% 86% 79%
MDD 11/22/2000 3.32% -- 11/21/1956 2.34% -- 11/27/1964 1.30%
SPX summary for all years 1952 - 2007
Averages -0.26% 0.12% 0.32% 0.42% 0.60%
% Winners 43% 61% 79% 79% 68%

 

Conclusion

Last week we saw an oversold extreme not seen in 70 years. There has to be a bounce somewhere.

I expect the major indices to be higher on Friday November 28 than they were on Friday November 21.

Last weeks positive forecast was a miss.

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

Ken Loebel
07 Dec 08, 09:48
Does trading reflect terrorist threats

You have to consider the markets prior to 9/11 and the irrational selling for the year prior, and include a fair assessment of a possible planned terrorist threat on America and to the markets when looking at comparisons for guidance.

I believe we have a higher than normal threat, which may also be part of market action. Additionally, liquidation of commodities and paper assets may be a prelude to pulling money out of the system in an attempt to financially crash an illiquid, bankrupt country and force its hand to its creditors (Russia, Saudi Arabia, China, Japan).

It is not a pretty picture.


Post Comment

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