The good news is:
The Russell 2000 (R2K) closed at an all time high last Thursday.
The Negatives
The first chart covers the past 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.
NY NH continues to show narrow leadership.
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The next chart is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH in green has been calculated with NASDAQ data.
OTC NH continued falling in spite of the index rally.
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 turned downward late 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 turned downward late last week.
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 finished the week in positive territory.
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 finished the week in positive territory.
Seasonality
Next week includes the 5 trading days prior to the 4th Friday of June 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 1953 to 2025. There are summaries for both the 2nd 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.
Seasonality for the coming week has been modestly negative and weaker during the 2nd year of the Presidential Cycle than other years.
Report for the week before the 4th Friday of June.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.
OTC Presidential Year 2 (PY2)
Year Mon Tue Wed Thur Fri Totals
1966-2 -0.03% 0.22% 0.30% 0.27% -0.82% -0.06%
Avg -0.03% 0.22% 0.30% 0.27% -0.82% -0.06%
1970-2 0.87% -0.03% -2.69% -0.34% -1.10% -3.29%
1974-2 -0.29% 0.60% -1.36% -1.84% -1.13% -4.03%
1978-2 -0.62% -0.72% -1.15% 0.04% 0.05% -2.40%
1982-2 -0.30% 0.63% 1.07% 0.15% -0.37% 1.18%
1986-2 -0.01% 0.53% 0.83% 0.16% 0.16% 1.67%
Avg -0.07% 0.20% -0.66% -0.36% -0.48% -1.37%
1990-2 -1.45% -0.06% 0.06% 0.10% -0.42% -1.76%
1994-2 -1.44% -1.40% 0.56% -1.67% -1.01% -4.96%
1998-2 1.38% 2.14% 1.79% -0.77% 0.33% 4.88%
2002-2 1.34% -2.49% 0.38% 2.09% 0.27% 1.60%
2006-2 -0.92% -0.16% 1.62% -0.85% -0.07% -0.38%
Avg -0.22% -0.39% 0.88% -0.22% -0.18% -0.12%
2010-2 -0.90% -1.19% -0.33% -1.63% 0.27% -3.78%
2014-2 0.01% -0.42% 0.68% -0.02% 0.43% 0.69%
2018-2 0.01% -0.28% 0.72% -0.88% -0.26% -0.69%
2022-2 0.00% 2.51% -0.15% 1.62% 3.34% 7.33%
OTC summary for PY2 1966 - 2022
Avg -0.17% -0.01% 0.15% -0.24% -0.02% -0.27%
Win% 36% 40% 67% 47% 47% 40%
OTC summary for all years 1963 - 2025
Avg -0.07% 0.12% 0.08% 0.03% -0.14% 0.02%
Win% 47% 61% 54% 63% 52% 52%
SPX PY2
Year Mon Tue Wed Thur Fri Totals
1954-2 0.07% 0.07% 0.17% 0.45% -0.21% 0.55%
1958-2 -0.36% -0.38% 0.25% 0.47% 0.13% 0.11%
1962-2 -0.27% -0.36% -1.37% -2.17% -1.70% -5.87%
1966-2 -0.03% 0.27% 0.16% -0.40% 0.09% 0.08%
1970-2 -0.53% -2.45% -1.06% 0.07% -0.74% -4.72%
1974-2 0.26% 1.47% -1.47% -1.55% -0.36% -1.65%
1978-2 0.07% -1.01% -0.52% 0.24% -0.41% -1.62%
1982-2 -0.07% 1.03% 1.70% -0.28% -0.63% 1.74%
Avg -0.06% -0.14% -0.24% -0.39% -0.41% -1.23%
1986-2 -0.94% 0.72% 0.77% -0.08% 0.35% 0.82%
1990-2 -1.66% 0.45% 0.18% 0.38% -1.40% -2.06%
1994-2 -0.65% -0.91% 0.39% -0.76% -1.52% -3.45%
1998-2 0.24% 1.48% 1.20% -0.32% 0.35% 2.94%
2002-2 0.36% -1.67% -0.27% 1.76% 0.00% 0.18%
Avg -0.53% 0.01% 0.45% 0.20% -0.56% -0.31%
2006-2 -0.91% 0.00% 0.97% -0.53% -0.09% -0.55%
2010-2 -0.39% -1.61% -0.30% -1.68% 0.29% -3.69%
2014-2 -0.01% -0.64% 0.49% -0.12% 0.19% -0.09%
2018-2 -0.21% -0.40% 0.17% -0.63% 0.19% -0.89%
2022-2 0.00% 2.45% -0.13% 0.95% 3.06% 6.33%
Avg -0.38% -0.04% 0.24% -0.40% 0.73% 0.22%
SPX summary for PY2 1954 - 2022
Avg -0.30% -0.08% 0.07% -0.23% -0.14% -0.66%
Win% 29% 44% 61% 39% 47% 44%
SPX summary for all years 1953 - 2025
Avg -0.12% 0.16% -0.01% 0.00% -0.15% -0.12%
Win% 42% 57% 48% 54% 46% 49%
Interest Rates
Treasury rates at their close last Thursday and their changes from 3 months ago:
2yr yield 4.187% up from 3.734%
5yr yield 4.240% up from 3.860%
10yr yield 4.460% up from 4.282%
30yr yield 4.898% down from 4.903%
The next chart, made with FastTrack covering the past year showing a relative comparison of US treasuries. 30 year in red, 10 year in green, 5 year in yellow and 2 year in purple.
Conclusion
The market began the week moving downward then finished the week with a rally that did not take the breadth indicators with it.
The strongest sectors last week were Electronics and Leisure while the weakest were Energy and Precious Metals (for the 3rd week).
I expect the major averages to be lower on Friday June 19 than they were Friday June 18.
Good luck
Mike Burk
YTD W8 / L12 / T 5
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