Technical Market Report March 19/05
by Mike Burk
March 19/05
The good news is:
•The market is oversold as it enters a short but seasonally strong period.
The first chart sums it up.
The chart shows the NASDAQ composite (OTC) in red a 10% trend (19 day EMA) of NASDAQ new highs in green and a 10% trend of NASDAQ new lows on an inverted Y axis in blue. The new low indicator is plotted on an inverted Y axis so that declining new lows move the indicator upward while increasing new lows move the indicator downward. The chart covers the period from about 2 weeks before the August bottom through last Friday.
Dashed vertical lines mark the 1st trading day of each month.
For the past 2 weeks, new lows have been increasing and new highs decreasing
as prices have been declining. Last Friday there were 88 new lows on the
NASDAQ, the highest number since last August. There is no sign of a bottom.
Short term the market is over sold.
The Chart below shows the Russell 2000 (R2K) in red and an indicator
showing the percentage of the previous 10 trading days that were up in
green. As of last Friday, only 2 of the previous 10 trading days had been
up, a figure matched only twice before, in early January (since the rally
began last August).
The chart below shows the R2K in red and an indicator showing momentum
of downside volume subtracted from momentum of upside volume in blue.
The indicator is at a low level reached only twice before since this rally
began. Each previous low was at or near the beginning of a short term
rally.
So far March has closely followed its typical seasonal pattern for the
1st year of the presidential cycle. If March follows the monthly seasonal
pattern precisely, the low for the month will occur next Tuesday. The
low for the week preceding Good Friday during the first year of the presidential
cycle usually occurs on Monday. If the market continues to follow the
seasonal patterns, there should be a short term low early next week.
Seasonal report for the week preceding Good Friday.
Monday is the worst day of the week.
Average performance was positively skewed by large gains in 2001.
Some of the largest drawdowns occurred in 1997 when Good Friday was near
the end of March.
4 days before Good Friday
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.
OTC Presidential Year 1 |
|||||
|
Day4 |
Day3 |
Day2 |
Day1 |
Totals |
1965-1 |
1.01% 1 |
0.20% 2 |
0.36% 3 |
0.66% 4 |
2.23% |
1969-1 |
0.34% 5 |
0.74% 2 |
0.26% 3 |
-0.18% 4 |
1.16% |
1973-1 |
-0.58% 1 |
-0.79% 2 |
0.06% 3 |
0.39% 4 |
-0.93% |
1977-1 |
-0.68% 1 |
-0.26% 2 |
0.25% 3 |
0.15% 4 |
-0.54% |
1981-1 |
-0.38% 1 |
-0.44% 2 |
0.75% 3 |
0.77% 4 |
0.70% |
|
|||||
Avg |
-0.06% |
-0.11% |
0.33% |
0.36% |
0.52% |
|
|||||
1985-1 |
0.40% 1 |
-0.39% 2 |
-0.49% 3 |
-0.15% 4 |
-0.63% |
1989-1 |
-0.92% 1 |
0.82% 2 |
-0.30% 3 |
0.09% 4 |
-0.30% |
1993-1 |
0.13% 1 |
-0.98% 2 |
0.71% 3 |
-0.38% 4 |
-0.52% |
1997-1 |
-0.92% 1 |
0.44% 2 |
1.68% 3 |
-1.54% 4 |
-0.34% |
2001-1 |
1.47% 1 |
2.00% 2 |
2.54% 3 |
3.29% 4 |
9.29% |
|
|||||
Avg |
0.03% |
0.38% |
0.83% |
0.26% |
1.50% |
|
|||||
Averages |
-0.01% |
0.14% |
0.58% |
0.31% |
1.01% |
%Winners |
50% |
50% |
80% |
60% |
40% |
MDD 3/27/1997 1.54% -- 4/17/1973 1.37% -- 4/4/1985 1.03% |
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|
|||||
OTC Summary of all years 1963 - 2004 |
|||||
Averages |
0.05% |
0.12% |
0.27% |
0.37% |
0.81% |
% Winners |
52% |
62% |
67% |
74% |
62% |
|
|||||
|
|||||
S&P 500 (SPX) Presidential year 1 |
|||||
|
Day4 |
Day3 |
Day2 |
Day1 |
Totals |
1953-1 |
-1.46% 1 |
-1.25% 2 |
-0.16% 3 |
-0.08% 4 |
-2.95% |
1957-1 |
-0.20% 1 |
0.16% 2 |
0.13% 3 |
0.73% 4 |
0.82% |
1961-1 |
-0.11% 1 |
0.05% 2 |
0.85% 3 |
0.20% 4 |
0.99% |
|
|||||
1965-1 |
0.43% 1 |
0.11% 2 |
0.23% 3 |
-0.10% 4 |
0.67% |
1969-1 |
0.41% 5 |
-0.09% 2 |
-0.63% 3 |
-0.10% 4 |
-0.41% |
1973-1 |
-0.57% 1 |
-0.45% 2 |
0.54% 3 |
0.56% 4 |
0.09% |
1977-1 |
-0.99% 1 |
-0.22% 2 |
-0.10% 3 |
0.35% 4 |
-0.97% |
1981-1 |
-1.01% 1 |
-0.35% 2 |
1.12% 3 |
0.40% 4 |
0.15% |
|
|||||
Avg |
-0.35% |
-0.20% |
0.23% |
0.22% |
-0.09% |
|
|||||
1985-1 |
0.34% 1 |
-0.41% 2 |
-0.79% 3 |
-0.04% 4 |
-0.90% |
1989-1 |
-0.95% 1 |
0.49% 2 |
-0.29% 3 |
-0.52% 4 |
-1.27% |
1993-1 |
0.20% 1 |
-0.26% 2 |
0.36% 3 |
-0.20% 4 |
0.10% |
1997-1 |
0.86% 1 |
-0.23% 2 |
0.18% 3 |
-2.10% 4 |
-1.29% |
2001-1 |
0.81% 1 |
2.71% 2 |
-0.21% 3 |
1.51% 4 |
4.82% |
|
|||||
Avg |
0.25% |
0.46% |
-0.15% |
-0.27% |
0.29% |
|
|||||
Averages |
-0.17% |
0.02% |
0.10% |
0.05% |
-0.01% |
%Winners |
46% |
38% |
54% |
46% |
54% |
MDD 4/2/1953 2.92% -- 3/27/1997 2.15% -- 4/14/1981 1.36% |
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|
|||||
SPX Summary of all years 1953 - 2004 |
|||||
Averages |
0.05% |
0.18% |
0.07% |
0.24% |
0.55% |
% Winners |
48% |
56% |
53% |
66% |
68% |
The market is oversold and entering a period of modest seasonal strength.
I expect the major indices to be higher on Thursday March 24 than they were on Friday March 18.
Mike Burk
Guaranteed-Profits.com
The SEC does not like statements like "Guaranteed Profits" and would be delighted to prosecute if I did anything that came under their jurisdiction such as offering individualized advice. So don't ask.
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