The good news is:
The S&P 500 (SPX) and Nasdaq composite (OTC) both closed at all time highs last Friday.
The Negatives
The first chart covers the past 6 months showing the Nasdaq composite (OTC) in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.
OTC NH again, failed to confirm the index all time high by a wide margin.
The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NH in green has been calculated with NYSE data.
NY NH ditto.
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The Positives
The next chart covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of Nasdaq new highs divided by new highs + new lows (OTC HL Ratio), in red. Dashed horizontal lines have been drawn, on the Y axis, at 10% levels for the indicator; the line is solid at the 50%, neutral level (equal numbers of new highs and new lows).
OTC HL Ratio deteriorated a bit as the index moved to a new all time high.
The next chart is similar to the one above except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data.
NY HL Ratio also turned downward, but remained at a very high level.
The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue. NY NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good).
NY NL continued its upward move last week.
The next chart is similar to the one above except it shows the OTC in blue and OTC NL, in brown, has been calculated with Nasdaq data.
OTC NL also continued moving upward.
Seasonality
Next week includes the last 4 days of April and the 1st day of May during the 2nd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis, for that period.
OTC data covers the period from 1963 to 2025 while SPX data runs from 1928 to 2025. There are summaries for both the 2nd year of the Presidential Cycle and all years combined.
Seasonality for the coming week has been mixed weaker during the 2nd year of the Presidential Cycle than other years.
Report for the last 4 days of April and the first 1 day of May.
The number following the year represents its position in the Presidential Cycle.
The number following the daily return represents the day of the week;1 = Monday, 2 = Tuesday et
Presidential Year 2 (PY2)
Day4 Day3 Day2 Day1 Day1 Totals
1966-2 1.10% 2 0.03% 3 -0.81% 4 -0.07% 5 0.51% 1 0.77%
1970-2 -0.49% 1 -2.01% 2 -2.66% 3 1.59% 4 -0.29% 5 -3.86%
1974-2 -1.05% 4 0.23% 5 0.26% 1 0.46% 2 0.89% 3 0.79%
1978-2 0.60% 2 0.37% 3 -0.10% 4 0.51% 5 0.68% 1 2.06%
1982-2 -0.58% 2 0.09% 3 -0.40% 4 0.30% 5 0.15% 1 -0.44%
Avg -0.08% -0.26% -0.74% 0.56% 0.39% -0.14%
1986-2 0.21% 5 -0.23% 1 -0.57% 2 -1.53% 3 -0.41% 4 -2.53%
1990-2 0.33% 3 0.12% 4 -0.73% 5 0.50% 1 0.42% 2 0.64%
1994-2 1.14% 1 0.47% 2 -0.34% 4 0.29% 5 0.93% 1 2.49%
1998-2 -2.61% 1 0.63% 2 1.08% 3 0.91% 4 0.27% 5 0.28%
2002-2 0.02% 4 -2.91% 5 -0.42% 1 1.89% 2 -0.63% 3 -2.05%
Avg -0.18% -0.38% -0.20% 0.41% 0.12% -0.23%
2006-2 -0.13% 2 0.14% 3 0.49% 4 -0.95% 5 -0.77% 1 -1.22%
2010-2 -2.04% 2 0.01% 3 1.63% 4 -2.02% 5 1.53% 1 -0.90%
2014-2 -1.75% 5 -0.03% 1 0.72% 2 0.27% 3 0.31% 4 -0.49%
2018-2 -0.05% 3 1.22% 4 0.02% 5 -0.75% 1 0.91% 2 1.34%
2022-2 -3.95% 2 -0.01% 3 3.06% 4 -4.17% 5 1.63% 1 -3.44%
Avg -1.59% 0.27% 1.18% -1.53% 0.72% -0.94%
OTC summary for PY2 1966 - 2022
Averages -0.62% -0.13% 0.08% -0.18% 0.41% -0.44%
% Winners 40% 67% 47% 60% 73% 47%
MDD 4/29/2022 5.15% -- 4/29/1970 5.08% -- 4/29/2002 3.31%
OTC summary for all years 1963 - 2025
Averages -0.08% 0.02% 0.32% 0.02% 0.29% 0.57%
% Winners 46% 63% 70% 57% 61% 60%
MDD 4/30/2004 5.73% -- 4/29/2022 5.15% -- 4/29/1970 5.08%
SPX PY2
Day4 Day3 Day2 Day1 Day1 Totals
1930-2 0.20% 6 -2.40% 1 -0.12% 2 0.69% 3 -2.41% 4 -4.05%
1934-2 -1.37% 4 0.09% 5 -0.83% 6 -2.33% 1 0.00% 2 -4.45%
1938-2 1.20% 3 -3.08% 4 0.10% 5 -0.82% 6 -1.13% 1 -3.72%
1942-2 -0.40% 1 -0.93% 2 1.87% 3 0.66% 4 0.65% 5 1.86%
1946-2 0.22% 5 0.86% 6 -0.11% 1 0.21% 2 -0.27% 3 0.92%
1950-2 -0.39% 3 0.56% 4 0.56% 5 0.61% 6 0.83% 1 2.17%
1954-2 -0.43% 2 0.00% 3 1.51% 4 0.28% 5 -0.18% 1 1.19%
1958-2 0.51% 5 -0.32% 1 -0.51% 2 1.02% 3 0.23% 4 0.93%
1962-2 -1.10% 3 -0.97% 4 -1.12% 5 -1.60% 1 0.71% 2 -4.08%
Avg -0.24% 0.03% 0.07% 0.11% 0.26% 0.23%
1966-2 -0.10% 2 -0.25% 3 -0.69% 4 -0.08% 5 -0.18% 1 -1.29%
1970-2 -1.58% 1 -1.46% 2 1.92% 3 -0.35% 4 -0.10% 5 -1.58%
1974-2 -0.81% 4 0.68% 5 -0.20% 1 0.34% 2 2.11% 3 2.13%
1978-2 0.91% 2 0.19% 3 -0.99% 4 1.01% 5 0.87% 1 1.98%
1982-2 -1.06% 2 -0.63% 3 -0.96% 4 0.27% 5 0.32% 1 -2.06%
Avg -0.53% -0.29% -0.18% 0.24% 0.61% -0.16%
1986-2 0.11% 5 0.33% 1 -1.06% 2 -2.07% 3 -0.15% 4 -2.85%
1990-2 0.51% 3 0.27% 4 -1.14% 5 0.51% 1 0.44% 2 0.58%
1994-2 1.13% 1 -0.19% 2 -0.61% 4 0.40% 5 0.47% 1 1.21%
1998-2 -1.93% 1 -0.13% 2 0.88% 3 1.57% 4 0.83% 5 1.21%
2002-2 -0.15% 4 -1.39% 5 -1.01% 1 1.08% 2 0.89% 3 -0.59%
Avg -0.07% -0.22% -0.59% 0.30% 0.49% -0.09%
2006-2 -0.49% 2 0.28% 3 0.33% 4 0.07% 5 -0.41% 1 -0.22%
2010-2 -2.34% 2 0.65% 3 1.29% 4 -1.66% 5 1.31% 1 -0.75%
2014-2 -0.81% 5 0.32% 1 0.48% 2 0.30% 3 -0.01% 4 0.27%
2018-2 0.18% 3 1.03% 4 0.11% 5 -0.82% 1 0.25% 2 0.76%
2022-2 -2.81% 2 0.21% 3 2.47% 4 -3.63% 5 0.57% 1 -3.19%
Avg -1.25% 0.50% 0.94% -1.15% 0.34% -0.63%
SPX summary for PY2 1930 - 2022
Averages -0.45% -0.26% 0.09% -0.18% 0.23% -0.57%
% Winners 38% 50% 46% 63% 58% 50%
MDD 5/2/1938 4.86% -- 4/30/1962 4.70% -- 4/30/1934 4.39%
SPX summary for all years 1928 - 2025
Averages 0.03% -0.06% 0.07% 0.14% 0.09% 0.25%
% Winners 56% 53% 55% 55% 55% 60%
MDD 5/2/1932 8.45% -- 4/29/1936 6.82% -- 5/2/1938 4.86%
Interest Rates
The following chart was supplied by Gordon Harms.
The chart was made with FastTrack and covers the past year showing a relative comparison of US treasuries. 30 year in red, 10 year in green, 5 year in purple and 2 year in black.
Treasury rates at their close last Friday and their changes from last month:
2yr yield 3.791% up from 3.734%
5yr yield 3.925% up from 3.860%
10yr yield 4.307% up from 4.282%
30yr yield 4.912% up from 4.903%
May
Since 1963, over all years, the OTC in May has been up 62% of the time with an average gain of 1.0%. During the 2nd year of the Presidential Cycle the OTC in May has been up 40% of the time with an average loss of 1.8% (helped by a 13.0% loss in 1970). The best May ever for the OTC was 1997 (+11.1%), the worst 1970 (-13.0%)
The average month has 21 trading days. The chart below has been calculated by averaging the daily percentage change for each of the 1st 11 trading days and each of the last 10. In months when there were more than 21 trading days some of the days in the middle were not counted. In months when there were less than 21 trading days some of the days in the middle of the month were counted twice. Dashed vertical lines have been drawn after the 1st trading day and at 5 trading day intervals after that. The line is solid on the 11th trading day, the dividing point.
In the chart below the blue line shows the average daily performance of the OTC in May over all years since 1963, while the black line shows the average during the 2nd year of the Presidential Cycle over the same period.
Since 1928 the SPX has been up 60% of the time in May with an average gain or loss of less than 0.1%. During the 2nd year of the Presidential Cycle the SPX has been up 50% of the time with an average loss of 0.8%. The best May ever for the SPX was 1933 (+15.9%) the worst 1940 (-24.0%).
The chart below is similar to the one above except it shows the average daily average performance over all years since 1928 for the SPX in May in red and the average daily performance during the 2nd year of the Presidential Cycle, over the same period, in black.
Since 1979 the Russell 2000 (R2K) has been up 64% of the time in May with an average gain of 1.3%. During the 2nd year of the Presidential Cycle the R2K has been up 36% of the time with an average loss of 1.0%. The best May ever for the R2K 1997 (+11.0%), the worst 2010 (-7.7%)
The chart below is similar to those above except it shows the average daily performance of the R2K, over all years since 1979, in May in magenta and the average daily performance during the 2nd year of the Presidential Cycle in black.
Since 1885 the Dow Jones Industrial Average (DJIA) has been up 53% of the time in May with an average loss of -0.1%. During the 2nd year of the Presidential Cycle the DJIA has been up 57% of the time in May with an average gain of 0.4%. The best May ever for the DJIA 1898 (+14.7%), the worst 1940 (-21.7%)
The chart below is similar to those above except it shows the average daily performance over all years for the DJIA in May in grey and the average performance during the 2nd year of the Presidential Cycle in black.
Conclusion
The breadth indicators have been strong while seasonality for the coming month has been weak.
The strongest sectors last week were Electronics and Transportation while the weakest were Health care and Precious metals.
I expect the major averages to be lower on Friday May 1 than they were Friday April 24.
Last week the Dow Jones Industrial Average was down while the other major indices were up, so I am calling last week's negative forecast a tie.
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