Report for the last 5 trading days of August.
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 3 (PY3)
               Day5      Day4      Day3      Day2      Day1      Totals
 1963-3       0.43% 1  -0.20% 2   0.14% 3   0.20% 4   0.23% 5     0.80%
 1967-3      -0.23% 5  -0.59% 1  -0.48% 2   0.11% 3   0.60% 4    -0.60%
 1971-3       0.23% 3   0.11% 4   0.30% 5  -0.54% 1  -0.27% 2    -0.16%
 1975-3       0.51% 1  -0.82% 2   0.47% 3   1.95% 4   1.22% 5     3.33%

 1979-3       0.07% 1   0.02% 2   0.33% 3   0.01% 4   0.25% 5     0.69%
 1983-3      -0.46% 4   0.27% 5  -0.33% 1   0.17% 2   0.88% 3     0.54%
 1987-3       0.29% 2   0.04% 3  -0.10% 4  -0.33% 5   0.37% 1     0.26%
 1991-3       0.06% 1   0.07% 2   0.87% 3   0.02% 4  -0.13% 5     0.89%
 1995-3      -0.09% 5  -1.16% 1  -0.46% 2   0.90% 3   0.74% 4    -0.06%

 Avg         -0.02%    -0.15%     0.06%     0.15%     0.42%       0.46%

 1999-3       1.93% 3  -1.10% 4  -0.57% 5  -1.67% 1   0.98% 2    -0.43%
 2003-3      -0.06% 1   0.36% 2   0.65% 3   1.01% 4   0.57% 5     2.53%
 2007-3      -0.60% 1  -2.37% 2   2.50% 3   0.08% 4   1.21% 5     0.83%
 2011-3      -1.95% 4   2.49% 5   3.32% 1   0.55% 2   0.13% 3     4.53%
 2015-3      -0.44% 2   4.24% 3   2.45% 4   0.32% 5  -1.07% 1     5.51%

 Avg         -0.22%     0.72%     1.67%     0.06%     0.36%       2.60%

OTc summary for PY3 1963 - 2015
Averages     -0.02%     0.10%     0.65%     0.20%     0.41%       1.33%
% Winners       50%       57%       64%       79%       79%         71%
MDD  8/30/1999  3.31% --  8/28/2007  2.95% --  8/25/2011  1.95%

OTC summary for all years 1963 - 2018
Averages      0.15%    -0.09%     0.13%    -0.12%     0.11%       0.19%
% Winners       55%       55%       64%       61%       71%         59%
MDD 8/31/1998  16.63% --  8/30/2001  6.53% --  8/30/1966  6.30%


SPX PY3
               Day5      Day4      Day3      Day2      Day1      Totals
 1931-3       1.68% 3  -0.57% 4   1.01% 5   0.79% 6  -1.70% 1     1.20%
 1935-3      -2.97% 2  -0.18% 3   0.63% 4   0.63% 5   0.71% 6    -1.18%

 1939-3       2.61% 6  -1.85% 1   2.78% 2  -1.05% 3  -1.58% 4     0.92%
 1943-3       0.34% 4  -0.68% 5   0.09% 6  -0.09% 1   1.11% 2     0.77%
 1947-3      -1.42% 1   0.00% 2   0.13% 3  -0.20% 4   0.66% 5    -0.83%
 1951-3      -0.13% 1   0.22% 2   0.79% 3   0.69% 4   0.17% 5     1.74%
 1955-3       0.45% 4   0.44% 5  -0.07% 1  -0.09% 2   0.61% 3     1.33%

 Avg          0.37%    -0.37%     0.74%    -0.15%     0.19%       0.79%

 1959-3       0.20% 2   0.14% 3   0.96% 4  -0.25% 5   0.18% 1     1.24%
 1963-3       0.21% 1  -0.54% 2   0.73% 3   0.17% 4   0.47% 5     1.03%
 1967-3      -0.42% 5  -0.06% 1   0.26% 2   0.20% 3   0.61% 4     0.59%
 1971-3       0.01% 3  -0.17% 4   0.24% 5  -0.96% 1  -0.49% 2    -1.37%
 1975-3       0.93% 1  -1.29% 2   0.56% 3   2.33% 4   0.56% 5     3.08%

 Avg          0.19%    -0.39%     0.55%     0.30%     0.27%       0.91%

 1979-3       0.50% 1  -0.11% 2   0.00% 3   0.00% 4   0.28% 5     0.66%
 1983-3      -0.25% 4   0.81% 5   0.07% 1   0.20% 2   1.12% 3     1.94%
 1987-3       1.03% 2  -0.65% 3  -0.95% 4  -1.31% 5   0.84% 1    -1.04%
 1991-3      -0.08% 1  -0.20% 2   0.91% 3  -0.04% 4  -0.26% 5     0.32%
 1995-3       0.47% 5  -0.19% 1   0.17% 2   0.16% 3   0.17% 4     0.79%

 Avg          0.33%    -0.07%     0.04%    -0.20%     0.43%       0.54%

 1999-3       1.34% 3  -1.43% 4  -1.01% 5  -1.80% 1  -0.27% 2    -3.17%
 2003-3       0.07% 1   0.30% 2   0.01% 3   0.61% 4   0.52% 5     1.50%
 2007-3      -0.85% 1  -2.35% 2   2.19% 3  -0.42% 4   1.12% 5    -0.30%
 2011-3      -1.56% 4   1.51% 5   2.83% 1   0.23% 2   0.49% 3     3.51%
 2015-3      -1.35% 2   3.90% 3   2.43% 4   0.06% 5  -0.84% 1     4.20%

 Avg         -0.47%     0.39%     1.29%    -0.26%     0.20%       1.15%

SPX summary for PY3 1931 - 2015
Averages      0.04%    -0.13%     0.67%    -0.01%     0.20%       0.77%
% Winners       59%       32%       82%       50%       73%         73%
MDD  8/31/1999  4.44% --  8/28/2007  3.18% --  8/28/1935  3.14%

SPX summary for all years 1928 - 2018
Averages     -0.07%    -0.06%     0.05%    -0.09%     0.12%      -0.05%
% Winners       43%       47%       64%       49%       62%         57%
MDD 8/31/1998  12.39% --  8/29/1938  6.10% --  8/29/1966  5.74%

The next chart is similar to the one above except is shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.

The pattern is similar to the chart above. 

The 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.

OTC HL Ratio rose to the neutral line Thursday before falling back into negative territory.

The next chart covers the past 6 months showing 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 new lows move the indicator upward (up is good)

 OTC NL moved sharply upward until Friday.  This indicates a high likelihood the recent decline is over. 

The next chart is similar to the 1st chart except it shows the SPX in red and NY NH has been calculated with NYSE data.

The decline of NY NH was arrested last week.

Seasonality
Next week includes the last 5 trading days of August during the 3rd 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 1928 to 2018.  There are summaries for both the 3rd year of the Presidential Cycle and all years combined.  

Average returns for the coming week have been mostly positive and stronger during the 3rd of the Presidential Cycle than other years.

​​​​​The Positives

An abrupt price decline from a cycle high that was confirmed by breadth is usually followed by a return to new highs.  Typically cycle highs do not end until they are unconfirmed by breadth.  The indices have about 3 weeks to hit their old highs before a nasty seasonal downturn begins.

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

 NY HL Ratio spent last week in positive territory finishing the week at 62%.  

Conclusion
New lows declined most of last week, but remained at uncomfortable levels.  The seasonal pattern shows weakness on Monday of next week followed by strength the rest of the week.

I expect the major averages to be higher on Friday August 30 than they were on Friday August 23.

Last weeks positive forecast was a miss.

Good Luck,
Mike Burk
YTD W 15 / L 10 / T 8

Technical market report for August 24, 2019.

The good news is: The current decline may have ended.


The Negatives

New lows remained at threatening levels on both the NYSE and NASDAQ.

A Hindenburg Omen was triggered on Friday an improvement from the previous week.  Hindenburg Omens are triggered when new highs and new lows both exceeded 2.8% of issues traded on the NYSE and the McClellan Oscillator is negative.
An interesting note; Hindenburg Omens were also triggered by the 10% trends (19 day EMA’s) of NYSE new highs and new lows every day for the past 3 weeks.  The McClellan Oscillator was not negative every day during the past 3 weeks.

The first chart covers the past 6 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.

OTC NH continued falling as the market rallied early last week.