SACO INVEST

Fórum da Saco Invest
 
HomeHome  FAQFAQ  SearchSearch  RegisterRegister  MemberlistMemberlist  UsergroupsUsergroups  Log in  

Share | 
 

 Weekly Market Forecast

View previous topic View next topic Go down 
AuthorMessage
gastaoss



Number of posts : 440
Registration date : 2007-07-01

PostSubject: Weekly Market Forecast   Tue Aug 21, 2007 1:29 am

Weekly Market Forecast


By Mike Burk





Technical market report for August 18, 2007




The good news is:


·
The Federal Reserve Bank cut its discount rate 0.5% to 5.75% on Friday.





What is going on?


Technical
analysis is the study of trading patterns as technicians we look for repeating patterns.


The current
patterns are so extreme there are not enough examples to draw conclusions.





On Thursday
there were 1132 new lows on the NYSE the 3rd highest number ever
recorded and 33% of the total issues traded.


The records
are:


Date Total issues traded New lows Percent of total


10/20/1987 2076 1174 57%


8/31/1998 3571 1183 33%


8/16/2007 3453 1132 33%





In the late
1980’s I found when ever there had been more than 200 new lows on the NYSE
there was always a retest of the low.
There are nearly twice as many issues traded now so it is probably safe
to double that number. The 1132 new lows
last Thursday makes a retest of Thursday’s low likely.





On October 19, 1987 the Dow
Jones Industrial Average (DJIA) closed at 1738.74; in two days it rallied 17%
to close at 2027.85 then fell over the next 6 weeks to 1766.74 on December 4, 1987, 1.6%
above the crash low. The crash low
occurred 37 trading days after the all time high of 2722.42 reached on August 25, 1987.





On August
31, 1998 the DJIA closed at 7539.07, 19.3% off its all time high set 31 trading
days earlier on 7/17/1998. It then
rallied 8.2% over 16 trading days before retesting its low on October 1, 1998. The DJIA reached 7632.53 on October 1, 1998 1.2% above
its August 31 low.





On August
16, 2007 the DJIA closed at 12,845.78, 8.2% off its all time high set 20
trading days earlier on 7/19/2007. At
this point there is nothing to suggest last Thursday’s low will hold as the low
for this down leg.





The all
time record for new lows on the NASDAQ was set on October 26, 1987 at 1534,
32% of the 4851 issues traded that day.
On October 8, 1998 there were
1343 new lows or 28% of the 4849 issues traded on that day. The 480 new lows on the NASDAQ August 6, 2007
represented 15% of the 3182 issues traded and ranks 42 among the all time high
number of new lows for that exchange.





The Federal
Reserve Bank cut the discount rate by 0.5% on Friday and the Dollar Index
dropped 3.1%. That will not be
encouraging to foreign investors. On the
weekend before the 1987 crash then Treasury Secretary James Brady gave a speech
where he stated we would let the dollar fall to defend our balance of
trade. I think that speech triggered the
crash.





Evidence of
a bottom will take time to develop and lows of last week are likely to be
retested. The DJIA, S&P 500 and
NASDAQ composite (OTC) all registered 10% intraday declines on Thursday from
their highs last month. It appears 10%
was a threshold that triggered some massive buy programs.





Seasonality


Next week
includes the week prior to the 4th. Friday in
August during the 3rd year of the Presidential Cycle.





The tables
show the daily returns for the week during the 3rd year of the
Presidential Cycle. OTC data covers the
period from 1963 – 2003 and S&P 500 (SPX) data from 1953 – 2003. There are summaries for both the 3rd
year of the Presidential Cycle and all years combined. Prior to 1953 the market traded 6 days a week
so that data has been ignored.





During the
3rd year of the Presidential Cycle, in the coming week, returns have
been modest. The SPX has been up 69% of
the time, but, the average return has only been 0.08%.





Report
for the week before the 4th Friday of Aug


The
number following the year is the position in the presidential cycle.


Daily
returns from Monday through the 4th Friday.





OTC
Presidential Year 3


Year
Mon Tue Wed
Thur Fri
Totals


1963-3
0.26% -0.14% -0.06%
0.06% 0.58% 0.69%





1967-3 -0.02% 0.10%
-0.11% -0.34% -0.23%
-0.61%


1971-3
0.34% 0.31% 0.23%
0.11% 0.30% 1.30%


1975-3 -0.70%
-1.77% -1.47% 0.50%
0.72% -2.71%


1979-3
0.07% 0.03% 0.51%
0.26% 0.18% 1.05%


1983-3 -0.11%
-1.71% -0.95% -0.46%
0.27% -2.96%





Avg -0.08% -0.61%
-0.36% 0.02% 0.25%
-0.79%





1987-3 -0.31% 0.29%
0.04% -0.10% -0.33%
-0.42%


1991-3 -2.89% 0.89%
3.17% 0.06% 0.53%
1.76%


1995-3 -1.12% 0.55%
0.28% -0.71% -0.09%
-1.09%


1999-3
2.69% 1.21% 1.93% -1.10%
-0.57% 4.16%


2003-3
2.20% 1.24% -0.03% 0.97%
-0.69% 3.69%





Avg 0.11%
0.83% 1.08% -0.18%
-0.23% 1.62%





OTC
summary for Presidential Year 3 1963 - 2003


Avg 0.04%
0.09% 0.32% -0.07% 0.06%
0.44%


Win%
45% 73% 55%
55% 55% 55%





OTC
summary for all years 1963 - 2006


Avg -0.07% -0.03% 0.33%
-0.11% 0.06% 0.16%


Win%
41% 55% 64%
55% 57% 59%





SPX
Presidential Year 3


Year
Mon Tue Wed
Thur
Fri Totals


1955-3 -0.10% 1.36%
0.14% 0.45% 0.44%
2.29%


1959-3 -0.36% 0.20%
0.14% 0.96% -0.25%
0.70%


1963-3 -0.07%
-0.08% -0.13% 0.35%
0.31% 0.38%





1967-3 -0.56%
-0.54% -0.14% -0.56%
-0.42% -2.21%


1971-3
1.03% 1.07% 0.01% -0.17% 0.24%
2.17%


1975-3 -0.19%
-1.45% -2.04% -0.18%
1.46% -2.40%


1979-3
0.49% 0.07% 0.07% -0.33%
-0.03% 0.28%


1983-3
0.22% -0.96% -0.93%
-0.25% 0.81% -1.12%





Avg 0.20% -0.36%
-0.61% -0.30% 0.41%
-0.65%





1987-3 -0.77% 1.03%
-0.65% -0.95% -1.31%
-2.65%


1991-3 -2.36% 0.79%
2.94% 0.19% 0.73%
2.28%


1995-3 -0.20% 0.25%
-0.43% 0.06% 0.47%
0.16%


1999-3
1.77% 0.24% 1.34% -1.43%
-1.01% 0.91%


2003-3
0.92% 0.26% -0.20% 0.30%
-1.02% 0.25%





Avg -0.13%
0.51% 0.60% -0.37%
-0.43% 0.19%





SPX
summary for Presidential Year 3 1955 - 2003


Avg -0.01%
0.17% 0.01% -0.12% 0.03%
0.08%


Win%
38% 69% 46%
46% 54% 69%





SPX
summary for all years 1953 - 2006


Avg -0.12%
0.03% 0.17% -0.18%
-0.07% -0.18%


Win%
44% 56% 56%
46% 46%
59%





Mutual Fund

Compliance issues demand that I not mention the mutual fund that I manage
by name or symbol in this letter.





To see a
current chart of the fund go to:


http://finance.yahoo.com/q/bc?s=APHAX&t=6m&l=on&z=m&q=l&c=





For
information about the fund go to: http://www.thealphafunds.com/index.htm


The fund
now has service class shares available.





Conclusion

We are only 21 trading days from the all time high set
for the DJIA on July 19 and number of new lows suggests this decline will be
significant. There is probably further
to go on the downside.


I expect the major indices to be lower on Friday
August 24 than they were on Friday August 17.


This report is free to anyone who wants it, so
please tell your friends.

They can sign up at:

http://alphaim.net/signup.html


If it is not for you, reply with REMOVE in the
subject line.


Last week’s positive forecast based on entering
a seasonally strong week from an oversold position was a miss.


Thank you,

Mike Burk

YTD W14/L11/T8


Disclaimer: Mike Burk is an
employee and principal of Alpha Investment Management (Alpha) a registered investment
advisor. Charts and figures presented herein are believed to be reliable but we
cannot attest to their accuracy. Recent
(last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus (qp2.com) and the
Wall Street Journal (wsj.com).
Historical data is from Barron’s and ISI price books. The views expressed are provided for
information purposes only and should not be construed in any way as investment
advice. Furthermore, the opinions
expressed may change without notice.

You may reproduce these letters
provided you include a citation along with a link to the subscription page:
http://alphaim.net/signup.html
Back to top Go down
View user profile
 
Weekly Market Forecast
View previous topic View next topic Back to top 
Page 1 of 1
 Similar topics
-
» Weekly Market Focus
» How to forecast?
» Weekly Market Focus
» LSL Weekly Market Review w/e 02/08/2013
» LSL Weekly Market Review w/e 06/09/2013

Permissions in this forum:You cannot reply to topics in this forum
SACO INVEST :: SACO INVEST-
Jump to: