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----- Original Message -----
Sent: Saturday, September 18, 2004 9:31 AM
Subject: 9/18 Report
Technical market report for September 18,
2004
The good news
is:
- All of the intermediate term indicators are
still moving sharply upward.
Summation indices (SI) are running totals of
oscillator values. When the
oscillator is positive the SI moves upward when the oscillator is negative the
SI moves downward. The chart below
shows SI’s derived from oscillators of the component issues of the Russell 2000
index (R2K) advances & declines, new highs & new lows and upside &
downside volume. All of the SI’s
are moving sharply upward. 
Now the rest of the story.
At
turning points you can see a slight lag in the SI’s. This is because it takes the oscillators
a day or two to cross the 0 line.
In the chart below the oscillator (in pink) is calculated by subtracting
a 22 day EMA from an 11 day EMA of new highs and new lows of the component
issues of the R2K. New highs and
new lows have been calculated over the past 30 trading days rather than 52 weeks
as reported by the exchanges to make the indicator more sensitive. The oscillator is well above the 0 line
(dashed in blue) and the SI (in green) is heading sharply upward. A third indicator in blue shows momentum
of the oscillator. Momentum
indicators, for the most part, call your attention to the obvious. In this case, the high low oscillator is
weakening. In the same chart about
three months earlier the oscillator stalled for a week or so and the momentum
indicator went negative as a rally was beginning. It is imprudent to jump the gun reacting
to indicators of indicators, on the other hand, the market has gone straight up
for the past 5 weeks and some of the indicators are weakening so caution is
suggested.
The chart below shows the Russell 2000 (R2K) in
red, the S&P 500 (SPX) in green and Accutrack (a FastTrack relative strength
indicator) as a histogram in yellow.
Accutrack is about as high as it has been at any time in the past
year. These high points in the past
have all preceded tradable declines.
Seasonally next week is a bad one. The S&P 500 (SPX) has been up only
19% of the time in the past 15 years while the R2K has been up 38% of the time,
however, gains in the up years have been small compared to the losses in the
down years and both indices have averaged losses of about 1% for the
week.
Report
for the week after witching Friday of September.
Witching is
futures and options expiration the 3rd Friday of the month.
The
number following the year is the position in the presidential cycle.
Daily returns from Monday to Friday after witching.
Year
Mon
Tue
Wed Thur Fri Totals
1988-4 -0.12% 0.07% -0.08% -0.14% 0.14% -0.13%
1989-1 -0.18% -0.01% -0.09% 0.12% 0.22% 0.07%
1990-2 -2.51% 0.11% -1.43% -1.92% 0.44% -5.31%
1991-3 -0.29% 0.13% -0.04% 0.09% -0.25% -0.36%
1992-4 -0.08% -0.54% -0.07% 0.36% -1.05% -1.38%
1993-1 -0.05% -0.88% 1.15% 0.59% 0.32% 1.14%
1994-2 -0.29% -0.98% -0.81% -0.02% -0.29% -2.38%
1995-3 -0.30% 0.17% 0.30% -0.38% -0.49% -0.71%
1996-4 -0.36% 0.31% 0.31% 0.37% 0.15% 0.79%
1997-1 0.40% 0.10% -0.19% -0.15% 0.21% 0.38%
1998-2 -0.17% 1.54% 2.11% -1.53% -0.33% 1.62%
1999-3 -0.29% -1.55% 0.24% -1.71% -0.74% -4.05%
2000-4 -2.67% 1.28% -0.36% -1.36% 0.87% -2.24%
2001-1 -1.80% 1.06% 2.84% 0.92% -0.50% 2.53%
2002-2 -2.34% -0.59% 2.40% 1.52% -2.40% -1.41%
2003-3 -1.26% 1.11% -2.21% -2.52% -1.97% -6.86%
Avg
-0.77% 0.08% 0.25% -0.36% -0.35% -1.14%
Win% 06% 63% 44% 44% 44% 38%
SPX
Year Mon Tue Wed Thur Fri Totals
1988-4 -0.68% 0.34% 0.16% -0.35% 0.20% -0.33%
1989-1 0.48% -0.05% -0.02% -0.22% 0.39% 0.58%
1990-2 -2.16% 1.20% -1.04% -1.34% 1.69% -1.65%
1991-3 -0.52% 0.46% -0.21% -0.10% -0.15% -0.52%
1992-4 -0.19% -1.18% 0.07% 0.25% -0.98% -2.04%
1993-1 -0.82% -0.46% 0.72% 0.34% -0.02% -0.25%
1994-2 -0.07% -1.59% -0.41% -0.04% -0.35% -2.46%
1995-3 -0.10% 0.25% 0.44% -0.64% -0.22% -0.27%
1996-4 -0.08% -0.13% 0.03% 0.00% 0.05% -0.12%
1997-1 0.52% -0.37% -0.78% -0.70% 0.78% -0.55%
1998-2 0.37% 0.56% 3.54% -2.19% 0.19% 2.48%
1999-3 0.01% -2.09% 0.22% -2.30% -0.24% -4.40%
2000-4 -1.45% 1.07% -0.59% -0.16% -0.02% -1.15%
2001-1 -0.23% 1.23% 1.99% -0.25% 0.16% 2.91%
2002-2 -1.38% -1.73% 2.49% 1.82% -3.23% -2.03%
2003-3 -1.30% 0.61% -1.91% -0.61% -0.64% -3.85%
Avg
-0.47% -0.12% 0.29% -0.41% -0.15% -0.85%
Win% 25% 50% 56% 25% 44%
19%
There is still no evidence of a
market turning point, but after 5 consecutive up weeks the market is ripe for a
pullback as we enter a seasonally weak
period.
I expect the major indices to be lower on Friday
September 24 than they were on Friday September
17.
This report is free to anyone who wants it, so
please tell your friends.
They can sign up
at:
http://www.guaranteed-profits.com
If it is not for you, reply with
REMOVE in the subject line.
Thank you,
Mike Burk
W18/L14/T5
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