The good news is:
The Dow Jones Industrial average (DJIA) and S&P 500 (SPX) closed at an all time highs Friday while the NASDAQ composite (OTC) closed at a multi year high.
The NegativesThe first chart covers the last 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.NY NH did not confirm the new SPX high.(Click on image to enlarge)
The next chart is similar to the one above except it shows the OTC in blue and OTC NH, in green, has been calculated with NASDAQ data.OTC NH also failed to confirm the multi year index high.(Click on image to enlarge)
The PositivesThe next chart covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of NASDAQ new highs divided by new highs + new lows (OTC HL Ratio), in red. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level (equal numbers of new highs and new lows).OTC HL Ratio remained in positive territory,(Click on image to enlarge)
The next chart is similar to the one above except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data.NY HL ratio fell slightly to a very strong 83%. (Click on image to enlarge)
The next chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good). OTC NL turned modestly downward as the index hit a new multi year high.(Click on image to enlarge)
The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.Ditto NY NL.(Click on image to enlarge)
Summation indices are running totals of oscillator values.Short term momentum indicators applied to summation indices make them nearly binary.The next chart covers the past 6 months showing the SPX in red and momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE. The NY SI Mom’s are mixed.(Click on image to enlarge)
The next chart is a close up showing, just the last month of the indicators in the previous chart.AD SI Mom and UD (volume) SI Mom have both turned downward.(Click on image to enlarge)
The next chart is similar to the one above; except it shows the OTC, in blue and the SI’s have been generated from NASDAQ breadth data. NASDAQ SI’s are mixed.(Click on image to enlarge)
The next chart is a close up showing, just the last month of the indicators in the previous chart.AD SI Mom and HL SI Mom have both turned downward.(Click on image to enlarge)
SeasonalityNext week includes the 5 trading days prior to the 2nd Friday of February during the 4th year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for that period. OTC data covers the period from 1963 to 2023 while SPX data runs from 1953 to 2023. 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.Average returns for the coming week have been mixed; the OTC has been modestly positive while the SPX has been modestly negative. Report for the week before the 2nd Friday of February.The number following the year is the position in the Presidential Cycle.Daily returns from Monday to 2nd Friday. OTC Presidential Year 4 (PY4) Year Mon Tue Wed Thur Fri Totals 1964-4 0.08% 0.05% 0.16% 0.24% -0.16% 0.38% 1968-4 -0.20% -0.26% 0.10% 0.21% -1.40% -1.55% 1972-4 -0.08% 0.17% 0.67% 0.45% 0.12% 1.33% 1976-4 0.66% 0.14% 0.84% 0.21% 0.09% 1.95% 1980-4 -0.17% 0.11% 0.49% 0.48% 0.90% 1.81% Avg 0.06% 0.04% 0.45% 0.32% -0.09% 0.78% 1984-4 -2.00% -0.32% -1.49% -0.89% 0.93% -3.77% 1988-4 -0.36% 0.13% 1.26% 0.49% 0.64% 2.16% 1992-4 -0.13% -0.12% 1.82% -0.90% -0.42% 0.25% 1996-4 1.04% 0.54% -0.39% 0.77% 0.13% 2.09% 2000-4 1.83% 2.00% -1.46% 2.00% -2.00% 2.37% Avg 0.08% 0.45% -0.05% 0.29% -0.14% 0.62% 2004-4 -0.17% 0.72% 0.69% -0.77% -0.97% -0.49% 2008-4 -1.26% -2.00% -1.33% 0.63% 0.52% -3.46% 2012-4 -0.13% 0.07% 0.41% 0.39% -0.80% -0.06% 2016-4 -1.82% -0.35% 0.35% -0.39% 1.66% -0.56% 2020-4 1.13% 0.11% 0.90% -0.14% 0.20% 2.20% Avg -0.45% -0.29% 0.20% -0.06% 0.12% -0.47% OTC summary for PY4 1964 – 2020 Avg -0.10% 0.07% 0.20% 0.19% -0.04% 0.31% Win% 33% 67% 73% 67% 60% 60% OTC summary for all years 1963 – 2023 Avg -0.11% 0.16% 0.07% 0.10% 0.05% 0.28% Win% 38% 61% 56% 64% 60% 57%
SPX PY4 Year Mon Tue Wed Thur Fri Totals 1956-4 0.07% -0.47% -0.99% -1.13% -0.05% -2.57% 1960-4 -1.18% 0.94% -0.63% -0.56% 0.51% -0.92% 1964-4 -0.17% 0.36% 0.31% -0.06% -0.05% 0.39% 1968-4 -0.43% 0.03% 0.17% -1.26% -1.14% -2.63% 1972-4 -0.31% 0.19% 0.77% 0.04% -0.48% 0.21% 1976-4 0.16% 0.85% 0.30% -0.52% -0.58% 0.22% 1980-4 -0.65% 0.25% 0.92% 0.48% 1.44% 2.45% Avg -0.28% 0.34% 0.50% -0.26% -0.16% 0.13% 1984-4 -1.76% 0.42% -1.82% -0.28% 0.57% -2.87% 1988-4 -0.74% 1.05% 1.96% -0.28% 0.66% 2.65% 1992-4 0.65% 0.00% 0.81% -0.82% -0.29% 0.35% 1996-4 0.88% 0.76% 0.56% 0.94% 0.05% 3.19% 2000-4 -0.10% 1.32% -2.00% 0.36% -2.00% -2.42% Avg -0.21% 0.71% -0.10% -0.01% -0.20% 0.18% 2004-4 -0.26% 0.50% 1.07% -0.49% -0.55% 0.28% 2008-4 -1.05% -2.00% -0.76% 0.79% -0.42% -3.44% 2012-4 -0.04% 0.20% 0.22% 0.15% -0.69% -0.17% 2016-4 -1.42% -0.07% -0.02% -1.23% 1.95% -0.78% 2020-4 0.73% 0.17% 0.65% -0.16% 0.18% 1.57% Avg -0.41% -0.24% 0.23% -0.19% 0.10% -0.51% SPX summary for PY4 1956 – 2020 Avg -0.33% 0.27% 0.09% -0.24% -0.05% -0.26% Win% 29% 76% 65% 35% 41% 53% SPX summary for all years 1953 – 2023 Avg -0.23% 0.05% 0.11% -0.07% 0.06% -0.07% Win% 38% 54% 56% 43% 56% 56% ConclusionThe technical picture is not clear.There is no decisive direction in anything.Even the historical data is mixed.The strongest sectors last week were Transportation and Retail while the weakest were Electronics and Energy (back down from the top last week).I expect the major averages to be lower on Friday February 9 than they were on Friday February 2. Last week the Russell 2000 was down while the blue chip indices were up; so I am calling last weeks negative forecast a tie. More By This Author:Technical Market Report For Saturday, January 27Technical Market Report For Saturday, January 20 Technical Market Report For – Saturday, January 13
