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----- Original Message -----
Sent: Saturday, October 09, 2004 9:42 AM
Subject: 10/9 Report
Technical market report for October 9,
2004
The good news
is:
- The value of the NYSE new high indicator, a
10% trend (19 day EMA) of NYSE new highs, is 195. Well above the most conservative
levels of systems that use this indicator as a No Sell Filter
(NSF).
The short term rally that began two weeks ago
ended last Wednesday with 7 consecutive up days on the NASDAQ composite. This is the third time in the past year
that we have seen seven consecutive up days on this index. The chart below plots the percentage of
the last seven trading days that have been up in the past year. The indicator, in blue, reaches the top
of the chart when there have been seven consecutive up days. Each occurrence was followed by a brief
decline then a rally to higher highs.
You have to go back to April of 2000 (about 1
month prior to the all time high in the NASDAQ composite to find another period
when there were seven consecutive up days.
Interestingly, it was the third of three as is the current
occurrence. The chart below shows
the period from late October 1999 to early late March 2000.
The chart below shows the Russell 2000 (R2K) in
red and the S&P 500 (SPX) in green along with a FastTrack relative strength
indicator called Accutrack.
Accutrack rose sharply from mid August to mid September, declined
slightly into late September then rose to a higher high last
week.
The chart below shows a similar pattern last
year when Accutrack rose from late March to mid May, declined into late May then
rose to a higher high in early June.
After digesting its gains for
a couple weeks the advance resumed.
There are enough similarities
between June 2003 and October 2004 that it is reasonable to expect a similar
pattern implying a resumption of the rally later this
month.
Seasonally the week prior to options expiration
in October is strong with a slight advantage for the blue
chips.
Report
for the week prior to witching Friday during October.
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 the Monday before to the witching Friday.
R2K
Mon
Tue
Wed Thur *Fri* Totals
1988-4 -0.03% 0.38% -0.07% 0.36% -0.13% 0.51%
1989-1 -1.48% -0.18% 0.58% 1.40% -0.06% 0.26%
1990-2 0.00% -0.93% 0.13% 1.24% 0.96% 1.40%
1991-3 0.85% 1.19% 1.25% -0.01% 0.32% 3.60%
1992-4 0.49% 0.48% 0.17% -0.65% 1.31% 1.80%
1993-1 0.42% 0.58% 0.54% 0.44% 0.37% 2.35%
1994-2 0.04% -0.37% 0.31% -0.47% -0.30% -0.79%
1995-3 0.04% 0.17% 0.45% -0.21% -0.20% 0.25%
1996-4 0.32% 0.00% -0.19% -0.04% -0.10% -0.01%
1997-1 0.04% -0.27% -0.27% -1.21% -1.72% -3.42%
1998-2 2.27% -1.62% 1.45% 3.02% 2.41% 7.53%
1999-3 0.58% -1.28% -1.26% 0.00% -1.10% -3.06%
2000-4 0.28% -2.26% -0.99% 3.23% 1.28% 1.55%
2001-1 0.35% 1.03% -2.31% -0.81% 1.10% -0.63%
2002-2 0.46% 4.04% -2.68% 3.34% 0.22% 5.38%
2003-3 1.64% 0.81% -0.84% 0.43% -1.75% 0.29%
Avg
0.42% 0.11% -0.23% 0.63% 0.16% 1.06%
Win% 87% 56% 50% 50% 50% 69%
SPX
Mon
Tue
Wed Thur *Fri* Totals
1988-4 0.33% 1.07% -0.86% 2.13% 0.28% 2.95%
1989-1 2.76% -0.49% 0.18% 1.57% 0.01% 4.02%
1990-2 1.07% -1.42% -0.05% 2.34% 2.20% 4.13%
1991-3 1.32% 1.17% 0.46% -0.22% 0.15% 2.87%
1992-4 1.19% 0.46% 0.02% 0.06% 0.52% 2.24%
1993-1 0.12% 0.05% 0.08% 1.16% 0.57% 1.99%
1994-2 -0.03% -0.28% 0.56% -0.73% -0.42% -0.90%
1995-3 -0.25% 0.64% 0.11% 0.55% -0.54% 0.51%
1996-4 0.41% -0.14% 0.26% 0.37% 0.54% 1.44%
1997-1 0.12% 0.23% -0.47% -1.09% -1.16% -2.37%
1998-2 1.35% -0.29% 1.08% 4.17% 0.85% 7.17%
1999-3 -0.06% -1.66% -2.09% -0.17% -2.81% -6.79%
2000-4 0.03% -1.79% -0.58% 3.47% 0.59% 1.72%
2001-1 -0.15% 0.69% -1.86% -0.79% 0.46% -1.65%
2002-2 0.73% 4.73% -2.41% 2.23% 0.59% 5.88%
2003-3 0.70% 0.40% -0.26% 0.32% -1.02% 0.13%
Avg
0.60% 0.21% -0.37% 0.96% 0.05% 1.46%
Win% 75% 56% 50% 69% 69%
75%
Thursday and Friday of last week provided and
appropriate sell off for the extreme rally that preceded it. With seasonal strength coming next week,
last Friday is likely to mark the low for the foreseeable
future.
I expect the major indices to be higher on
Friday October 16 than they were on Friday October
9.
Last week did not follow the script very
well. Too much of a good thing
going into Wednesday followed by a sell off that took all of the major indices
to losses for the week.
Gordon Harms produces a power point for our
local FastTrack users group meeting. You can get it at: http://www.guaranteed-profits.com
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/L16/T5
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