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----- Original Message -----
From: <A
title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk
To: <A title=profitok@xxxxxxxxxxxxx
href="">profitok@xxxxxxxxxxxxx
Sent: Saturday, April 03, 2004 2:19 PM
Subject: 4/3 Report
<A
name=OLE_LINK4><A
name=OLE_LINK1><SPAN
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>Technical market report for April 3,
2004The good news is:
<LI class=MsoNormal
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>The number of new lows remains
insignificant.
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>The NYSE AD line hit a new cycle high last
Friday.
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>The NASDAQ new high indicator has turned
upward.
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>The secondaries have led the up move that
began 8 trading days ago.
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>
<SPAN
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>All of this implies new highs in the blue chips
in the next 2 – 6 weeks. Everything
that matters is heading sharply upward, in the past 8 trading days the NASDAQ
composite has risen 8.2%, the Russell 2000 (R2K) has been up for 7 consecutive
days (a benchmark achieved only 4 other times in the past year) and is only 0.4%
off its all time high.
<SPAN
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>Last week I showed several charts of Summation
indexes (SI). These indicators are
calculated by summing the values of an oscillator, when the oscillator is above
0 the SI rises, when it is below 0 the SI falls.<SPAN
> At the end of last week all of the SI’s
were falling but two out of three on the S&P 500 (SPX) and (R2K) were about
to turn upward. I have mentioned
frequently that when all of the SI’s are heading in the same direction, it is
imprudent to bet against them. Last
week all of the SI’s on all of the major indices, the NYSE and NASDAQ turned
upward. The chart below showing
SI’s calculated from the component issues of the R2K is
typical.
<SPAN
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><v:shapetype id=_x0000_t75
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joinstyle="miter"><v:f
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gradientshapeok="t" o:connecttype="rect"><o:lock v:ext="edit"
aspectratio="t"><v:shape id=_x0000_i1025
type="#_x0000_t75"><v:imagedata
src=""
o:title="R2K-All-SI"><IMG
src="gif00102.gif">
<SPAN
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>I have mentioned the problem of NYSE data being
contaminated with fixed income issues in the past.<SPAN
> Justin Mamis wrote about the problem
more than 10 years ago calling it the Nuveen factor and pointing out at that
time 2.3% of the issues traded on the NYSE were essentially bond funds sponsored
by the Nuveen company alone. I have
read recent accounts claiming that more than 50% of issues traded on the NYSE
are fixed income related. I have
never read anything definitive, but the numbers reported Friday show the
problem.
<SPAN
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>The numbers for Friday were:Dow
Jones Industrial Average (DJIA) = up 0.94%SPX = up 0.85%<BR
clear=all>NYSE composite = up 0.54%R2K = up 1.37%<BR
clear=all>Shearson Lehman Treasury Bond index = down
2.08%
<SPAN
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>On Friday there were 1724 Advancing issues and
1570 declining issues on the NYSE.
Putting that in percentage terms 1724 / (1724+1570) = 52% advancing and
48% declining, a modest plurality for such a strong
day.
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>The tables below show similar calculations
limited to the component issues of the R2K and
SPX:
<SPAN
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><v:shape id=_x0000_i1026
type="#_x0000_t75"><v:imagedata
src=""
o:title="R2K-Data"><IMG
src="gif00103.gif">
<SPAN
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><v:shape id=_x0000_i1027
type="#_x0000_t75"><v:imagedata
src=""
o:title="SPX-Data"><IMG
src="gif00104.gif">
<SPAN
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>Looking at the NYSE figures might lead you to
conclude the advance was concentrated in relatively small number of high cap
issues, a pattern indicative of tops.
Limiting the calculations to equities presents a more positive
picture.
<SPAN
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>Paraphrasing the old Burger King Ad: Bonds is
Bonds raises the question “Which Bonds?”
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>Last week was pretty rough on corporates and
treasuries, but, not so bad for junk.
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>The chart below is an update of one I showed
last week, it covers the past 1.5 years and shows an average of 162 junk bond
funds in the FastTrack database (BD-Junk.fam) in red and the percentage of those
funds that are above their 50 day EMA in blue.<SPAN
> The percentage of junk bond funds above
their 50 day EMA has remained extremely high over the past 1.5 years with three
exceptions:
<P class=MsoNormal
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>1)<SPAN
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The low of October 2002.
<P class=MsoNormal
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>2)<SPAN
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The period of weakness July-August
2003.
<P class=MsoNormal
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>3)<SPAN
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The current period.
<SPAN
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>Those periods coincide with weak periods in
equities. Last week the percentage
of Junk bond funds above their 50 day EMA moved upward suggesting the soft patch
in equities has ended.
<SPAN
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><v:shape id=_x0000_i1028
type="#_x0000_t75"><v:imagedata
src=""
o:title="FT-BD-Junk"><IMG
src="gif00105.gif">
<SPAN
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>Last week I could not find convincing evidence
that the soft patch had ended. This
week there is no evidence that it has not
ended.
<SPAN
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>I expect the major indices will be higher on
Thursday April 8 (the market is closed Good Friday April 9) than they were on
Friday April 2.
<SPAN
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>My forecast for last week was spectacularly
wrong. With indicator development
there is a trade off between smoothness for clarity and lag.<SPAN
> Last week’s forecast highlighted the
problems inherent in that trade off.
<SPAN
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>This report is free to anyone who wants it, so
please tell your friends.They can sign up
at:http://www.guaranteed-profits.comIf it is not for you, reply with
REMOVE in the subject line.Thank you,Mike Burk W5/L6/T2<BR
><BR
>
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