Money supply (M2) and Interest Rates
The following charts were supplied by Gordon Harms.

M2 growth continued to slow down last month.

Conclusion
We have had Hindenburg Omens triggered on 8 of the last 9 trading days.  Money supply growth has been slowing, the yield curve appears to be headed for an inversion and the blue chips have been out performing the secondaries.

I expect the major averages to be lower on Friday September 21 than they were on Friday September 14.

Last weeks negative forecast was a miss.

Good Luck,
Mike Burk
YTD W 12 / L 15 / T 10

The Fed is supposed to raise short term rates later this month, a move that could easily establish an inverted yield curve, the most reliable predictor of recessions.

Seasonality
Next week includes the 5 trading days prior to the 3rd Friday of September during the 2nd 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 2018 while SPX data runs from 1953 to 2018.  There are summaries for both the 2nd 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 positive by all measures.

​​​​The Positives

In spite of deterioration of the breadth indicators prices have not broken their upward trends.

The next chart covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.  Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

After dancing around in modestly negative territory for a few days, NY HL Ratio rose into positive territory finishing the week at 55%.

The next chart is similar to the one above one except it shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated with NYSE data.

 NY NH has been a long way from confirming the strength in the SPX which finished the week 0.3% off its all time high.  

The next chart is similar to the one above except is shows the OTC in blue and OTC HL Ratio, in red, has been calculated with NASDAQ data.

OTC HL Ratio remained in positive territory finishing the week at 62%.

The next chart covers the past 6 months showing the OTC in blue and a 10% trend of NASDAQ new lows (OTC NL) in brown.  OTC NL has been plotted on an inverted Y axis so diminishing new lows move the indicator upward (up is good).

OTC NL did not turn upward when prices moved upward last week.

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.

NY NL continued moving downward last week as prices moved upward.

Technical market report for September 15, 2018

The good news is:
All of the major indices are near their all time highs.​


The Negatives

The Hindenburg Omen was developed by Jim Miekka to identify a high likelihood for a bear market.  It is triggered when NYSE new highs and new lows both exceed 2.8% of issues traded while the NYSE composite is above its 10 week moving average.  When a Hindenburg Omen has been triggered it is in effect for 30 days.  A Hindenburg Omen has been triggered every day this month except last Wednesday.

The first chart covers the past 9 months showing the NASDAQ composite (OTC) in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH) in green.  Dashed vertical lines have been drawn on the 1st trading day of each month.

I extended the duration of this chart to 9 months to show the progressive deterioration of OTC NH while the index was rising.

Report for the week before the 3rd Friday of September.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.

OTC Presidential Year 2
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1966-2  -0.08%   1.31%   0.15%   0.91%   0.63%   2.93%
 1970-2   0.09%  -0.13%  -1.14%   0.20%   1.15%   0.18%
 1974-2   1.02%   0.84%   0.69%   2.41%   0.64%   5.60%

 1978-2   0.43%   0.21%   0.01%  -0.65%  -0.71%  -0.72%
 1982-2   0.24%   0.93%   0.93%   0.26%  -0.10%   2.25%
 1986-2  -0.27%  -0.63%   0.94%   0.49%   0.24%   0.77%
 1990-2  -0.08%  -0.51%  -0.14%  -1.95%  -0.60%  -3.28%
 1994-2  -0.49%   0.77%   0.36%   1.31%  -0.10%   1.85%

 Avg     -0.03%   0.15%   0.42%  -0.11%  -0.25%   0.17%

 1998-2   1.47%   0.72%   0.73%  -2.58%   1.06%   1.40%
 2002-2  -1.20%  -1.25%  -0.62%  -2.85%   0.38%  -5.54%
 2006-2   0.34%   1.96%   0.53%   0.05%   0.31%   3.19%
 2010-2   1.93%   0.18%   0.50%   0.08%   0.54%   3.23%
 2014-2  -1.07%   0.75%   0.21%   0.68%  -0.30%   0.28%

 Avg      0.29%   0.47%   0.27%  -0.92%   0.40%   0.51%

OTC summary for Presidential Year 2 1966 - 2014 
 Avg      0.18%   0.40%   0.24%  -0.13%   0.24%   0.93%
 Win%       54%     69%     77%     69%     62%     77%

OTC summary for all years 1963 - 2017
 Avg      0.07%   0.19%   0.05%   0.21%   0.31%   0.82%
 Win%       45%     56%     63%     64%     69%     65%


SPX Presidential Year 2
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1954-2   0.91%   0.51%   0.03%   0.54%   0.79%   2.79%

 1958-2   0.89%   0.80%  -0.04%  -0.51%   0.65%   1.79%
 1962-2   0.32%  -0.08%  -0.14%  -0.70%  -1.45%  -2.05%
 1966-2   2.12%   0.53%   1.03%   1.20%  -0.11%   4.77%
 1970-2  -0.55%  -0.87%   0.53%   0.61%   0.40%   0.13%
 1974-2   1.63%   1.69%   0.50%   3.50%   0.07%   7.39%

 Avg      0.88%   0.41%   0.38%   0.82%  -0.09%   2.41%

 1978-2   0.18%   0.01%  -0.61%  -1.17%  -0.93%  -2.52%
 1982-2   1.05%   0.70%   0.97%  -0.42%  -0.99%   1.32%
 1986-2   0.55%  -0.09%  -0.02%   0.27%  -0.04%   0.67%
 1990-2   0.30%   0.26%  -0.63%  -1.62%  -0.05%  -1.74%
 1994-2  -0.42%   0.28%   0.27%   1.28%  -0.76%   0.65%

 Avg      0.33%   0.23%   0.00%  -0.33%  -0.55%  -0.32%

 1998-2   2.04%   0.78%   0.75%  -2.54%   0.12%   1.14%
 2002-2   0.14%  -1.97%  -0.46%  -3.01%   0.25%  -5.05%
 2006-2   0.05%   1.04%   0.38%  -0.14%   0.27%   1.61%
 2010-2   1.11%  -0.07%   0.35%  -0.04%   0.08%   1.44%
 2014-2  -0.07%   0.75%   0.13%   0.49%  -0.05%   1.25%

 Avg      0.66%   0.11%   0.23%  -1.05%   0.13%   0.08%

SPX summary for Presidential Year 2 1954 - 2014 
 Avg      0.64%   0.27%   0.19%  -0.14%  -0.11%   0.85%
 Win%       81%     69%     63%     44%     50%     75%

SPX summary for all years 1953 - 2017
 Avg      0.11%   0.12%   0.10%   0.16%   0.14%   0.63%
 Win%       52%     55%     64%     55%     57%     63%