Technical Market Report For July 11

The good news is:the Nasdaq composite (OTC) closed at another all time high Friday.

The Negatives

The secondaries represented by the Russell 2000 (R2K) were down last week while the OTC was scoring new all time highs.

The first chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in green. Dashed vertical lines have been drawn of the 1st trading day of each month.

This is a major non confirmation; both over the past 3.5 months and the past 1.5 weeks. Will it matter; probably not. This chart looks better than it did last week. At least OTC NH is moving upward.

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.

There is nothing pretty about this chart.

The Positives

New highs are not at the level you would expect for a market at or near all time highs. New lows have also been minimal which is what you would expect.

The next chart covers the past six months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

NY HL Ratio finished the week at 89%, very strong. 

The next chart is similar to the one above except it shows the OTC in blue and OTC HL Ratio, in red has been calculated with Nasdaq data.

OTC HL Ratio finished the week at a very strong 87%.

Seasonality

Next week includes the five trading days prior to the thirrd Friday of July during the fourth 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 2019 while SPX data runs from 1953 to 2019. There are summaries for both the fourth year of the Presidential Cycle and all years combined. Prior to 1953 the market traded six days a week so that data has been ignored.

Returns for next week have, on average, been negative by all measures.

Report for the week before the third Friday of July.

The number following the year is the position in the Presidential Cycle.

Daily returns from Monday through thirrd Friday.

OTC Presidential Year 4 (PY4)

 Year Mon Tue Wed Thu Fri Totals

 1964-4 0.34%-0.15%-0.10% 0.12%-0.05% 0.17%

 1968-4-0.07%-1.00% 0.00%-0.84%-1.41%-3.32%

 1972-4-0.76%-0.67% 0.18%-0.53% 0.42%-1.35%

 1976-4 0.50% 0.03% 0.51% 0.09%-0.13% 1.00%

 1980-4 0.29%-0.40% 0.02% 0.06%-0.17%-0.21%

 1984-4-0.42%-0.08%-0.54%-0.58%-0.66%-2.28%

 1988-4-0.05%-0.16% 0.01% 0.28%-0.02% 0.07%

 1992-4-1.09% 0.77%-0.84% 0.24% 0.07%-0.85%

 1996-4-3.92%-0.63% 3.15% 2.13%-1.09%-0.37%

 Avg -1.04%-0.10% 0.36% 0.43%-0.37%-0.73%

 2000-4 0.67%-2.28%-2.91% 3.18%-2.15%-3.49%

 2004-4-0.48%-0.27%-0.87%-0.11%-1.55%-3.28%

 2008-4-0.14% 1.07% 0.95%-1.97% 1.33% 1.25%

 2012-4-0.40% 0.45% 1.12% 0.79%-1.37% 0.60%

 2016-4 0.64% 0.69%-0.34% 0.57%-0.09% 1.47%

 Avg 0.06%-0.07%-0.41% 0.49%-0.76%-0.69%

OTC summary for PY4 1964 - 2016 

 Avg -0.35%-0.19% 0.03% 0.24%-0.49%-0.76%

 Win% 36% 36% 54% 64% 21% 43%

OTC summary for all years 1963 - 2019

 Avg -0.09%-0.09% 0.03% 0.04%-0.20%-0.32%

 Win% 57% 40% 50% 57% 42% 44%

SPX PY4

 Year Mon Tue Wed Thur Fri Totals

 1956-4 0.86% 0.35%-0.02% 0.04% 0.06% 1.29%

 1960-4-0.89%-1.09%-0.27% 0.04%-0.12%-2.33%

 1964-4-0.32%-0.24%-0.02%-0.05%-0.02%-0.66%

 1968-4-1.12%-0.12% 0.00%-1.28% 0.41%-2.12%

 1972-4-0.86%-0.05% 0.29%-0.31% 0.80%-0.12%

 1976-4 0.88%-0.22% 0.26%-0.71%-0.49%-0.28%

 Avg -0.46%-0.34% 0.07%-0.46% 0.11%-1.10%

 1980-4 0.39%-0.26%-0.21%-0.11%-0.83%-1.03%

 1984-4 0.48% 0.51%-0.64%-0.68%-0.55%-0.88%

 1988-4 0.20%-1.00% 0.55% 0.35% 0.66% 0.76%

 1992-4-0.45% 0.00%-0.68% 0.28%-0.12%-0.97%

 1996-4-2.53%-0.23% 0.91% 1.50%-0.75%-1.11%

 Avg -0.39%-0.19%-0.02% 0.27%-0.32%-0.65%

 2000-4 0.03%-1.11%-0.78% 0.92%-1.03%-1.97%

 2004-4 0.14% 0.07%-0.33%-0.43%-0.48%-1.03%

 2008-4-0.05% 1.35% 0.41%-2.31% 0.42%-0.19%

 2012-4-0.23% 0.74% 0.67% 0.27%-1.01% 0.44%

 2016-4 0.34% 0.70% 0.01% 0.53%-0.09% 1.49%

 Avg0.05% 0.35% 0.00%-0.21%-0.44%-0.25%

SPX summary for PY4 1956 - 2016 

 Avg -0.20%-0.04% 0.01%-0.12%-0.20%-0.54%

 Win% 50% 44% 47% 50% 31% 25%

SPX summary for all years 1953 - 2019

 Avg -0.11%-0.18% 0.03% 0.00%-0.13%-0.38%

 Win% 48% 35% 53% 58% 46% 42%

Conclusion

The Plunge Protection Team (PPT) AKA Presidents Working Group on Financial Markets gave us another all time OTC high.  

Seasonally next week has been very weak. Perhaps the PPT will allow the averages to slip a little .I am not betting on it.

The strongest sectors last week were precious metals and technology; the weakest were energy and finance. 

I expect the major averages to be higher on Friday, July 17, than they were on Friday, July 10.,In the PPT I trust.

Last week the R2K was down while all the other major averages were up so I am calling last weeks positive forecast a tie.