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----- Original Message -----
Sent: Saturday, October 16, 2004 9:54 AM
Subject: 10/16 Report
Technical market report for October 16,
2004
The good news
is:
- Nothing about the decline of the past week
suggests that it is anything but a routine pullback in an advancing
market.
All of the short term indicators cast doubt on
the above statement.
My favorite is the NASDAQ new high indicator, a
10% trend (19 day EMA) of NASDAQ new highs. The indicator shown in green in the
chart below continued to fall on both of last weeks up days. The current value of the indicator is 76
so it will take more than 76 new highs on the NASDAQ to turn the indicator
upward.
For a slightly longer term view, summation
indices (SI) calculated from advancing and declining issues, upside and down
side volume and new highs and new lows do a good job of ironing out the day to
day wiggles.
The chart below shows all of the SI’s calculated
from NASDAQ data are heading downward.
To me, talk of Fibonacci retracement levels
often sounds like a conspiracy theory.
The orderliness of the
advance off the August low prompted me to look at Fibonacci levels of the
advance from the August low. The
decline from the September 21 high to the September 27 low was 38% of the
advance from the August 12 low, a significant Fibonacci level. The decline to last Thursday’s low (if
it holds) was a 61% retracement of the advance from the September 27 low to the
October 6 high, another significant Fibonacci level. All of this occurred within a standard
error channel shown on the chart below.
Seasonally the week after options expiration in
October is a little weak. Three of
the last four of the weeks after October options expiration in the fourth year
of the presidential cycle have been down.
Report for the week after witching Friday
during Oct
Witching is futures and options expiration the 3rd
Friday of the month.
The number following the year is the position
in the presidential cycle.
R2K
Mon
Tue
Wed Thur Fri Totals
1988-4 -0.19% -0.14% -0.21% -0.99% 0.34% -1.20% *
1989-1 -0.66% -1.36% 0.28% -0.83% -1.08% -3.66%
1990-2 -0.43% 0.56% -0.02% 0.11% -1.24% -1.02%
1991-3 -0.25% 0.02% -0.02% -1.14% -0.51% -1.91%
1992-4 1.05% 0.41% 0.57% -0.15% 0.33% 2.22% *
1993-1 -0.16% -1.39% -0.36% 0.07% 0.23% -1.61%
1994-2 -0.50% -0.41% 0.10% 0.57% 1.09% 0.85%
1995-3 -0.57% -0.08% -1.00% -1.08% -0.03% -2.76%
1996-4 -0.50% -0.95% 0.03% 0.04% -0.03% -1.41% *
1997-1 1.01% 1.12% -0.15% -1.94% -0.38% -0.33%
1998-2 2.79% 1.66% 0.45% 1.79% 0.18% 6.88%
1999-3 -1.40% 0.50% 0.73% 0.08% 1.07% 0.98%
2000-4 0.51% -0.43% -2.59% 0.95% 0.02% -1.53% *
2001-1 1.13% -0.73% 0.07% 1.94% 0.62% 3.03%
2002-2 1.45% -1.62% 1.73% -0.79% 1.81% 2.58%
2003-3 0.21% 0.78% -2.36% -0.52% -0.80% -2.68%
Avg
0.22% -0.13% -0.17% -0.12% 0.10% -0.10%
Win% 44% 44% 50% 50% 56% 38%
SPX
Mon
Tue
Wed Thur Fri Totals
1988-4 -0.49% 0.04% -0.35% -1.46% 0.45% -1.81% *
1989-1 -0.67% -0.33% -0.35% -1.33% -0.85% -3.53%
1990-2 0.73% -0.76% 0.08% -0.78% -1.76% -2.49%
1991-3 -0.63% -0.56% 0.03% -0.74% -0.23% -2.13%
1992-4 0.79% 0.12% 0.05% -0.19% -0.19% 0.58% *
1993-1 -0.22% -0.48% -0.03% -0.15% -0.45% -1.33%
1994-2 -0.87% 0.15% 0.24% 0.70% 1.70% 1.91%
1995-3 -0.41% 0.26% -0.70% -0.99% 0.52% -1.32%
1996-4 -0.14% -0.46% 0.10% -0.70% -0.20% -1.40% *
1997-1 1.21% 1.74% -0.39% -1.84% -0.95% -0.22%
1998-2 0.57% 0.14% 0.56% 0.80% -0.72% 1.35%
1999-3 0.54% 0.57% 2.23% -0.45% 1.41% 4.29%
2000-4 -0.08% 0.17% -2.38% -0.03% 1.11% -1.21% *
2001-1 1.53% -0.47% 0.04% 1.37% 0.41% 2.88%
2002-2 1.73% -1.06% 0.67% -1.52% 1.72% 1.54%
2003-3 0.52% 0.13% -1.50% 0.33% -0.47% -0.99%
Avg
0.26% -0.05% -0.11% -0.44% 0.09% -0.24%
Win% 50% 56% 56% 25% 44%
38%
The short and intermediate term indicators and
seasonality suggest next week will be, at least, slightly down. The week needs to be up if the Fibonacci
levels and error channel are going to
hold.
I expect the major indices to be lower on Friday
October 22 than they were on Friday October
15.
My positive forecast for last week was a
miss. Seasonally, Monday should
have been strong enough to carry the week to a gain. Monday, although up, was disappointing
and the rest of the week followed Monday’s
lead.
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
W19/L17/T5
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