Saturday, May 10, 2008

SPECIAL THANKS TO MIKE BURK AND GORDON HARMS !!!

Another special thanks to Mike for providing this great data information and please take advantage of the power point presentation at the end by Gordon Harms !



I somewhat agree with Mike and this week will really bring out the best and worst of the markets. Low volume and options expiration week and short term trading can be the "death blow" ...I am currently 100% cash in out Traders account and about Flat also in out TTT Hedge Fund Main account with some hedges in the fund in case Oil breaks or if it breaks the wrong way! The forecasting ability during these times are sometimes luck but with the RUT acting as well as it did and the the Bears not real interested in taking the Bulls out ...there may be one more melt up in store ....so be defensive but look at the tape and don't fight the Fed .



Enjoy Mike's great info !









Technical market report for May 10, 2008


The good news is:

· The secondaries held up better than the blue chips in last weeks decline.



Short Term

The secondaries lead both up and down.

Although all of the major indices declined last week the S&P 500 (SPX) was down 1.81% while the Russell 2000 (R2K) was down only 0.78%.



The chart below covers this year showing the R2K in red and the SPX in green a FastTrack (www.fasttrack.net) relative strength indicator called Accutrack is shown as a histogram on the bottom. Accutrack hit its low a few days ahead of the January price low and last week rose while prices were declining. Although not as extreme as the January example the pattern last week was similar.







Intermediate Term

It is encouraging that volume did not increase during last weeks decline.



The chart below covers the past year showing the SPX in red and a 5% trend (39 day EMA) of NYSE total volume in black. Dashed vertical lines have been drawn on the 1st trading day of each month; the vertical line is red on the 1st trading day of the year. The indicator hit an all time high last August, a 3 year low in October and is again near its 3 year low. Hopefully, volume will pickup on the next rally.







Seasonality

Next week includes the 5 trading days prior to the 3rd Friday in May during the 4th year of the Presidential Cycle.



The tables show the daily return on a percentage basis for the 5 trading days prior to the 3rd Friday in May during the 4th year of the Presidential Cycle. NASDAQ (OTC) data covers the period from 1963 - 2007 and SPX data from 1953 - 2007. There are summaries for both the 4th 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.



By most measures the returns for the coming week have been modestly negative.



Report for the week before the 3rd Friday of May

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

Daily returns from Monday through 3rd Friday.



OTC Presidential Year 4

Year Mon Tue Wed Thur Fri Totals

1964-4 0.13% -0.28% 0.25% -0.40% -0.38% -0.68%



1968-4 0.67% -0.38% -0.53% -0.07% -0.30% -0.62%

1972-4 0.70% 0.02% -0.46% 0.82% 1.02% 2.09%

1976-4 -0.32% 0.04% -0.31% 0.31% -0.16% -0.43%

1980-4 -0.07% 0.80% 1.08% 0.66% 0.42% 2.89%

1984-4 -0.68% 0.05% -0.13% -1.03% -0.61% -2.40%



Avg 0.06% 0.11% -0.07% 0.14% 0.07% 0.31%



1988-4 0.23% -0.29% -1.42% -0.20% -0.06% -1.74%

1992-4 0.23% -0.54% -0.27% -1.02% -0.35% -1.95%

1996-4 1.59% 1.03% -0.07% 0.46% 0.21% 3.22%

2000-4 2.23% 3.05% -1.95% -2.92% -4.19% -3.79%

2004-4 -1.45% 1.13% 0.02% -0.08% 0.82% 0.43%



Avg 0.57% 0.88% -0.74% -0.75% -0.72% -0.76%



OTC summary for Presidential Year 4 1964 - 2007

Avg 0.30% 0.42% -0.34% -0.32% -0.33% -0.27%

Win% 64% 64% 27% 36% 36% 36%



OTC summry for all years 1963 - 2007

Avg -0.05% 0.06% 0.11% 0.03% -0.24% -0.08%

Win% 47% 47% 60% 51% 43% 49%





SPX Presidential Year 4

Year Mon Tue Wed Thur Fri Totals

1956-4 -0.55% -1.05% -0.69% 1.22% -0.47% -1.54%

1960-4 -0.09% 0.38% -0.04% 0.43% 0.27% 0.96%

1964-4 -0.12% 0.32% -0.23% -0.14% 0.30% 0.12%



1968-4 -0.31% -0.07% -0.05% -0.48% -0.72% -1.63%

1972-4 0.45% -0.19% 0.22% 0.98% 0.96% 2.43%

1976-4 -0.25% 0.17% -0.08% 0.81% -0.73% -0.07%

1980-4 0.06% 1.45% 0.52% 0.13% 0.34% 2.49%

1984-4 -0.62% 0.32% -0.01% -0.90% -0.51% -1.72%



Avg -0.14% 0.34% 0.12% 0.11% -0.13% 0.30%



1988-4 0.75% -1.28% -1.58% 0.49% 0.18% -1.45%

1992-4 0.59% -0.53% 0.04% -0.79% -0.74% -1.43%

1996-4 1.44% 0.62% -0.03% -0.09% 0.61% 2.56%

2000-4 2.21% 0.94% -1.24% -0.73% -2.10% -0.93%

2004-4 -1.06% 0.68% -0.26% 0.05% 0.40% -0.19%



Avg 0.79% 0.09% -0.61% -0.22% -0.33% -0.29%



SPX summary for Presidential Year 4 1956 - 2004

Avg 0.19% 0.14% -0.26% 0.08% -0.17% -0.03%

Win% 46% 62% 23% 54% 54% 38%



SPX summary for all years 1953 - 2007

Avg -0.01% 0.10% 0.10% -0.01% -0.13% 0.05%

Win% 50% 56% 51% 51% 49% 51%





Conclusion

Although it could change Monday, there are no indications that the current decline has played out and seasonally next week has been modestly negative.

I expect the major indices to be lower on Friday May 16 than they were on Friday May 9.

This report is free to anyone who wants it, so please tell your friends.
They can sign up at:
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If it is not for you, reply with REMOVE in the subject line.

Gordon Harms produces a Power Point for our local timing group meetings. You can get a copy of that at: http://www.stockmarket-ta.com/

Thank you,
Mike Burk
YTD W10/L5/T4

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 dare provided for information purposes only and should not be construed in any way as investment advice. Furthermore, the opinions expressed may change without notice.

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TTT
352-870-4626
tomandprisha@msn.com
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