Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Markets Heading for a Retest of July Lows

Stock-Markets / US Stock Markets Aug 30, 2008 - 09:03 PM GMT

By: Mike_Burk

Stock-Markets

Best Financial Markets Analysis ArticleThe good news is: Since the July lows the secondaries have been stronger than the blue chips.

Short Term The market is playing a disappearing act. Volume and new highs are at their lowest levels in years. Identifying strength or weakness under these conditions is challenging.


The chart below covers the past 6 months showing the S&P 500 (SPX) in red and an indicator showing the percentage of the last 3 days the NYSE ADL has been up in blue. The NYSE ADL is a running total of NYSE declining issues subtracted from advancing issues. Dashed vertical lines have been drawn on the 1st trading day of each month.

You do not have to look very carefully at this one. Just look for the empty areas. When the market is going up the indicator often hits the top of the chart and rarely touches the bottom. The opposite is true when the market is falling. The last time the indicator hit the bottom of the chart was at the July low while the last time it hit the top of the chart was last Thursday.

This indicator has not been overwhelmingly positive, but the bias has been to the upside.

Intermediate Term

On July 15 there were 1304 new lows on the NYSE, a record. After every record or, with only one exception, after every time there were even half as many new lows as we saw on July 15 there has been a retest of the low by the blue chip indices. A retest of the July 15 low in the next several weeks is likely.

The chart below covers the past year showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue. NY NL has been plotted on an inverted Y axis so increasing new lows move the indicator upward (up is good).

If a retest occurs in the next month or so NY NL will be much higher than it was at the July 15 lows.

The next chart shows the exception mentioned above.

On August 31, 1998 there were 1183 new lows on the NYSE, a record that held until last July. On October 10, 1998 there was a retest of the August 31 low on the retest there were 930 new lows and NY NL was considerably higher at the time. After the August 31 low the Fed opened the spigots and money supply was growing at a 24% annualized rate at the time of the October retest.

Seasonality

Next week includes the first 4 trading days of September during the 4th year of the Presidential Cycle.

The tables show the daily return on a percentage basis for the first 4 trading days of September during the 4th year of the Presidential Cycle. 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.

By all measures the market has been up about 60% of the time during the coming week with modest gains.

First 4 days of September.
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
Day1 Day2 Day3 Day4 Totals
1964-4 -0.12% 2 0.07% 3 0.39% 4 0.58% 5 0.92%
1968-4 0.34% 2 0.24% 3 -0.06% 4 0.55% 5 1.07%
1972-4 0.58% 5 -0.28% 2 -0.54% 3 -0.32% 4 -0.57%
1976-4 0.99% 3 0.10% 4 0.37% 5 0.21% 2 1.68%
1980-4 0.45% 2 1.20% 3 0.28% 4 0.30% 5 2.24%
1984-4 -1.28% 2 -0.31% 3 0.64% 4 -0.21% 5 -1.16%
Avg 0.22% 0.19% 0.14% 0.11% 0.65%
1988-4 -0.95% 4 0.95% 5 0.22% 2 0.17% 3 0.38%
1992-4 0.44% 2 1.00% 3 0.64% 4 -0.25% 5 1.82%
1996-4 0.07% 2 0.13% 3 -1.58% 4 1.22% 5 -0.16%
2000-4 0.66% 5 -2.15% 2 -3.14% 3 2.12% 4 -2.50%
2004-4 0.67% 3 1.24% 4 -1.55% 5 0.76% 2 1.13%
Avg 0.18% 0.23% -1.08% 0.80% 0.13%
OTC summary for Presidential Year 4 1964 - 2004
Averages 0.17% 0.20% -0.39% 0.47% 0.44%
% Winners 73% 73% 55% 73% 64%
MDD 9/6/2000 5.22% -- 9/5/1984 1.58% -- 9/5/1996 1.58%
OTC summary for all years 1963 - 2007
Averages 0.09% 0.11% -0.03% 0.16% 0.32%
% Winners 61% 67% 60% 60% 56%
MDD 9/7/2001 6.52% -- 9/4/1974 5.48% -- 9/6/2000 5.22%
SPX Presidential Year 4
Day1 Day2 Day3 Day4 Totals
1928-4 0.00% 6 0.48% 2 0.48% 3 -0.62% 4 0.34%
1932-4 0.95% 4 4.37% 5 2.49% 6 -1.66% 2 6.15%
1936-4 -0.25% 2 0.38% 3 -0.37% 4 0.44% 5 0.19%
1940-4 0.00% 2 2.08% 3 1.39% 4 -0.73% 5 2.74%
1944-4 0.31% 5 -0.62% 2 -2.43% 3 -0.32% 4 -3.06%
Avg 0.20% 1.34% 0.31% -0.58% 1.27%
1948-4 1.19% 3 0.50% 4 0.18% 5 0.49% 2 2.36%
1952-4 0.48% 2 0.40% 3 -0.04% 4 -0.12% 5 0.72%
1956-4 0.80% 2 0.27% 3 0.17% 4 -0.60% 5 0.63%
1960-4 0.23% 4 -0.16% 5 -0.89% 2 -1.24% 3 -2.06%
1964-4 0.43% 2 0.16% 3 0.30% 4 0.24% 5 1.13%
Avg 0.62% 0.23% -0.06% -0.25% 0.56%
1968-4 0.47% 2 0.70% 3 0.72% 4 0.46% 5 2.35%
1972-4 0.38% 5 -0.25% 2 -0.61% 3 -0.24% 4 -0.72%
1976-4 1.12% 3 -0.13% 4 0.37% 5 0.70% 2 2.05%
1980-4 1.10% 2 1.93% 3 -0.56% 4 -0.43% 5 2.05%
1984-4 -1.08% 2 -0.36% 3 0.83% 4 -0.77% 5 -1.38%
Avg 0.40% 0.38% 0.15% -0.06% 0.87%
1988-4 -1.21% 4 2.37% 5 0.42% 2 0.11% 3 1.69%
1992-4 0.49% 2 0.46% 3 0.00% 4 -0.22% 5 0.74%
1996-4 0.42% 2 0.13% 3 -0.94% 4 0.96% 5 0.58%
2000-4 0.20% 5 -0.90% 2 -0.98% 3 0.69% 4 -0.99%
2004-4 0.15% 3 1.12% 4 -0.42% 5 0.69% 2 1.54%
Avg 0.01% 0.64% -0.38% 0.45% 0.71%
SPX summary for Presidential Year 4 1928 - 2004
Averages 0.31% 0.65% 0.01% -0.11% 0.85%
% Winners 75% 70% 50% 45% 75%
MDD 9/7/1944 3.34% -- 9/7/1960 2.28% -- 9/6/2000 1.88%
SPX summary for all years 1928 - 2007
Averages -0.04% 0.14% 0.25% -0.11% 0.24%
% Winners 68% 56% 57% 43% 58%
MDD 9/4/1946 7.15% -- 9/4/1974 4.80% -- 9/7/1933 4.72%

September

Since 1963 the OTC has been up 62% of the time in September, but it has had an average loss of 0.2% for the month. The average loss was helped significantly by losses of 13.3% in 2000 and 15.4% in 2001. During the 5 year period from 1999 to 2003 the OTC was down every September. During the 4th year of the Presidential Cycle (which includes 2000) the OTC has been up 73% of the time with an average gain of 1.1%.

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 calculated. In months when there were less than 21 trading days some of the days in the middle 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 all years since 1963 while the green line shows the average during the 4th year of the Presidential Cycle.

Since 1928 the SPX has been up 45% of the time in September with an average loss of 1.1% for the month making it the worst month of the year. The worst September of all was in 1930 when the SPX lost 30.2%, the best September of all was 1939 when it gained 15.2%. During the 4th year of the Presidential Cycle the SPX has been up 60% of the time with an average loss of 0.3% putting it ahead of May (-1.3%), April (-0.9%) and February (-0.5%).

The chart below has been calculated like the one above. The red line shows the average September over all years since 1928 while the green line shows the average over the 4th year of the Presidential Cycle.

Conclusion

A retest of the July lows for the blue chips in the next month or so is likely. If and when it occurs it will be unconfirmed by the secondaries or new lows.

I expect the major indices to be higher on Friday September 5 than they were on Friday August 29.

Last week the blue chips were down a little while the secondaries 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