Technical Market Report For May 16, 2026

The good news is:

• The S&P 500 (SPX) and Nasdaq composite (OTC) closed at all time highs last Thursday.

The Negatives

The first chart covers the past 6 months showing the 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 has failed to confirm all of the new all time highs for the past month and moved downward during the past week.

The next chart is similar to the one above except it shows the OTC in blue and OTC NH in green has been calculated with NASDAQ data.  

OTC NH failed to confirm, by a small margin, the index all time high last Thursday.  

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 moved sharply downward 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 turned downward as the index moved to a new high.

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 fell, finishing the week in slightly negative territory. 

The Positives

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 fell last week, finishing the week at a slightly positive 50.6%.

Seasonality

Next week includes the 5 trading days prior to the 4th Friday 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 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 modest and mixed.

Report for the week before the 4th Friday of May.

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   1.13%   0.62%   1.04%   0.96%   0.80%   4.55%

 Avg      1.13%   0.62%   1.04%   0.96%   0.80%   4.55%

 1970-2   0.94%  -0.64%  -2.24%  -3.25%  -2.22%  -7.41%

 1974-2  -0.61%  -0.17%  -0.70%  -0.21%   1.12%  -0.58%

 1978-2   0.30%  -0.79%  -0.97%   0.02%   0.03%  -1.41%

 1982-2  -0.38%  -0.32%  -1.29%  -0.23%   0.10%  -2.13%

 1986-2  -0.24%   0.40%   0.32%   0.81%   0.59%   1.87%

 Avg      0.00%  -0.30%  -0.98%  -0.57%  -0.08%  -1.93%

 1990-2   1.02%   0.22%   0.66%   0.31%  -1.00%   1.21%

 1994-2  -0.24%   0.90%   0.18%  -0.16%   0.21%   0.89%

 1998-2  -0.82%   0.78%  -0.76%  -0.59%  -0.88%  -2.27%

 2002-2  -2.29%  -2.20%   0.56%   1.44%  -2.13%  -4.61%

 2006-2  -0.96%  -0.65%   0.48%   1.34%   0.55%   0.77%

 Avg     -0.66%  -0.19%   0.22%   0.47%  -0.65%  -0.81%

 2010-2  -0.69%  -0.12%  -0.68%   3.73%  -0.91%   1.32%

 2014-2   0.86%  -0.70%   0.85%   0.55%   0.76%   2.32%

 2018-2   0.54%  -0.21%   0.64%  -0.02%   0.13%   1.08%

 2022-2   1.59%  -2.35%   1.51%   2.68%   3.33%   6.76%

OTC summary for PY2 1966 - 2022 

 Avg      0.01%  -0.35%  -0.03%   0.49%   0.03%   0.16%

 Win%       47%     33%     60%     60%     67%     60%

OTC summary for all years 1963 - 2025

 Avg      0.04%  -0.20%   0.07%   0.17%   0.22%   0.30%

 Win%       52%     40%     57%     57%     65%     60%

SPX PY2

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1954-2   0.03%  -0.24%   0.83%  -0.41%   0.48%   0.69%

 1958-2  -0.28%   0.86%  -0.14%   0.53%   0.21%   1.18%

 1962-2  -0.36%  -1.97%  -1.97%  -0.80%  -1.90%  -7.00%

 1966-2   0.90%   0.66%   0.35%   0.00%   0.30%   2.21%

 1970-2   0.08%  -1.95%  -2.57%  -1.85%   0.12%  -6.17%

 1974-2  -0.40%   0.06%  -0.93%   0.23%   1.48%   0.43%

 1978-2   0.99%  -1.05%  -0.99%  -0.29%  -0.23%  -1.57%

 1982-2  -0.09%  -0.34%  -1.13%  -0.40%  -0.69%  -2.64%

 Avg      0.30%  -0.52%  -1.05%  -0.58%   0.20%  -1.55%

 1986-2   0.19%   1.25%  -0.28%   1.98%   0.51%   3.65%

 1990-2   0.95%   0.12%   0.24%  -0.24%  -1.07%  -0.01%

 1994-2  -0.38%   0.36%   0.34%   0.16%   0.06%   0.53%

 1998-2  -0.26%   0.33%   0.87%  -0.40%  -0.37%   0.17%

 2002-2  -1.33%  -1.10%   0.57%   1.02%  -1.21%  -2.05%

 Avg     -0.17%   0.19%   0.35%   0.50%  -0.41%   0.46%

 2006-2  -0.39%  -0.43%   0.16%   1.14%   0.57%   1.04%

 2010-2  -1.29%   0.04%  -0.57%   3.29%  -1.24%   0.23%

 2014-2   0.38%  -0.65%   0.81%   0.24%   0.42%   1.21%

 2018-2   0.74%  -0.31%   0.32%  -0.20%  -0.24%   0.31%

 2022-2   1.86%  -0.81%   0.95%   1.99%   2.47%   6.45%

 Avg      0.26%  -0.44%   0.33%   1.29%   0.40%   1.85%

SPX summary for PY2 1954 - 2022 

 Avg      0.07%  -0.29%  -0.18%   0.35%  -0.02%  -0.07%

 Win%       50%     44%     56%     53%     56%     67%

SPX summary for all years 1953 - 2025

 Avg      0.01%  -0.14%  -0.08%   0.06%   0.13%  -0.02%

 Win%       51%     44%     50%     53%     63%     59%

Conclusion

The super large cap components of the SPX and OTC carried those indices to new all time highs last Thursday.  Breadth was weak and nearly everything else fell.

The strongest sectors last week were Energy (up from the bottom last week) and Technology while the weakest were Banks and Utilities (for the 2nd week).

I expect the major averages to be lower on Friday May 22 than they were Friday May 15.

Last week the SPX was up while everything else was down.  I am calling last week's negative forecast a tie.