The good news is:
All of the major indices, except the Russell 2000, closed at all time highs last Friday. The Russell 2000 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 failed to confirm the new SPX high by a wide margin.
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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, by a small margin, failed to confirm the new index high.
The Positives
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 moving upward 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 last week.
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 moved upward to finish the week at a comfortable 79%.
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 moved upward finishing the week at 73%.
Seasonality
Next week includes the first 5 trading days 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 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 positive by all measures.
Report for the first 5 days of June
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 etc.
OTC Presidential Year 2 (PY2)
Day1 Day2 Day3 Day4 Day5 Totals
1966-2 -0.65% 3 0.43% 4 0.60% 5 0.25% 1 -0.52% 2 0.11%
1970-2 4.79% 1 1.44% 2 2.00% 3 2.47% 4 -2.34% 5 8.35%
1974-2 1.10% 1 0.85% 2 0.54% 3 1.20% 4 0.61% 5 4.30%
1978-2 0.08% 4 0.57% 5 0.88% 1 0.61% 2 0.20% 3 2.36%
1982-2 -0.66% 2 0.26% 3 -0.40% 4 -1.29% 5 -0.56% 1 -2.65%
Avg 0.93% 0.71% 0.72% 0.65% -0.52% 2.49%
1986-2 -0.20% 1 0.03% 2 0.01% 3 0.20% 4 -0.01% 5 0.02%
1990-2 0.69% 5 0.75% 1 -0.21% 2 0.08% 3 -0.19% 4 1.11%
1994-2 0.04% 3 0.54% 4 0.39% 5 0.14% 1 -0.56% 2 0.56%
1998-2 -1.80% 1 0.86% 2 -1.11% 3 1.59% 4 0.73% 5 0.27%
2002-2 -3.29% 1 1.00% 2 1.09% 3 -2.53% 4 -1.25% 5 -4.99%
Avg -0.91% 0.64% 0.03% -0.10% -0.25% -0.60%
2006-2 1.88% 4 -0.02% 5 -2.24% 1 -0.32% 2 -0.51% 3 -1.21%
2010-2 -1.54% 2 2.64% 3 0.96% 4 -3.64% 5 -2.04% 1 -3.61%
2014-2 -0.13% 1 -0.07% 2 0.41% 3 1.05% 4 0.59% 5 1.85%
2018-2 1.51% 5 0.69% 1 0.41% 2 0.67% 3 -0.70% 4 2.58%
2022-2 -0.72% 3 2.69% 4 -2.47% 5 0.40% 1 0.94% 2 0.85%
Avg 0.20% 1.19% -0.58% -0.37% -0.34% 0.09%
OTC summary for PY2 1966 - 2022
Averages 0.07% 0.84% 0.06% 0.06% -0.37% 0.66%
% Winners 47% 87% 67% 73% 33% 73%
MDD 6/7/2010 5.61% -- 6/7/2002 4.97% -- 6/7/2006 3.07%
OTC summary for all years 1963 - 2025
Averages 0.18% 0.45% 0.13% 0.09% 0.10% 0.94%
% Winners 60% 73% 59% 57% 52% 68%
MDD 6/7/2010 5.61% -- 6/7/2002 4.97% -- 6/7/2011 4.72%
SPX PY2
Day1 Day2 Day3 Day4 Day5 Totals
1930-2 -0.37% 1 -0.90% 2 0.45% 3 -1.56% 4 -1.63% 5 -4.01%
1934-2 -2.39% 5 -0.32% 6 1.50% 1 2.42% 2 0.21% 3 1.41%
1938-2 3.24% 3 -0.31% 4 -1.26% 5 2.44% 6 0.93% 1 5.04%
1942-2 0.49% 1 -0.12% 2 0.73% 3 1.33% 4 0.24% 5 2.68%
1946-2 -0.68% 1 -0.63% 2 -0.58% 3 -0.05% 4 0.05% 5 -1.89%
1950-2 -0.05% 4 0.11% 5 -1.01% 1 1.51% 2 0.26% 3 0.81%
1954-2 0.00% 2 -0.10% 3 -0.03% 4 -0.17% 5 -0.38% 1 -0.69%
1958-2 0.50% 1 0.34% 2 0.09% 3 0.11% 4 0.20% 5 1.24%
1962-2 -0.42% 5 -3.55% 1 0.52% 2 1.42% 3 0.02% 4 -2.01%
Avg -0.13% -0.77% -0.20% 0.56% 0.03% -0.51%
1966-2 -0.03% 3 -0.16% 4 0.12% 5 -0.74% 1 -0.69% 2 -1.52%
1970-2 1.69% 1 0.00% 2 0.87% 3 -1.48% 4 -1.54% 5 -0.46%
1974-2 2.09% 1 1.17% 2 0.19% 3 1.83% 4 0.64% 5 5.91%
1978-2 0.06% 4 0.81% 5 1.84% 1 0.37% 2 -0.20% 3 2.89%
1982-2 -0.18% 2 0.32% 3 -0.16% 4 -1.58% 5 0.03% 1 -1.57%
Avg 0.72% 0.43% 0.57% -0.32% -0.35% 1.05%
1986-2 -0.93% 1 0.19% 2 -0.64% 3 0.70% 4 0.01% 5 -0.67%
1990-2 0.53% 5 1.17% 1 -0.21% 2 -0.46% 3 -0.50% 4 0.54%
1994-2 0.25% 3 0.00% 4 0.54% 5 -0.27% 1 -0.15% 2 0.37%
1998-2 0.02% 1 0.18% 2 -0.94% 3 1.12% 4 1.74% 5 2.12%
2002-2 -2.48% 1 0.00% 2 0.88% 3 -1.98% 4 -0.16% 5 -3.73%
Avg -0.52% 0.31% -0.07% -0.18% 0.19% -0.27%
2006-2 1.23% 4 0.20% 5 -1.78% 1 -0.11% 2 -0.61% 3 -1.08%
2010-2 -1.72% 2 2.58% 3 0.41% 4 -3.44% 5 -1.35% 1 -3.52%
2014-2 0.07% 1 -0.04% 2 0.19% 3 0.65% 4 0.46% 5 1.34%
2018-2 1.08% 5 0.45% 1 0.07% 2 0.86% 3 -0.07% 4 2.39%
2022-2 -0.75% 3 1.84% 4 -1.63% 5 0.31% 1 0.95% 2 0.73%
Avg -0.02% 1.01% -0.55% -0.35% -0.12% -0.03%
SPX summary for PY2 1930 - 2022
Averages 0.05% 0.13% 0.01% 0.13% -0.06% 0.26%
% Winners 50% 58% 58% 54% 54% 54%
MDD 6/7/2010 4.75% -- 6/6/1930 3.96% -- 6/4/1962 3.96%
SPX summary for all years 1928 - 2025
Averages 0.00% 0.26% 0.18% 0.21% 0.04% 0.69%
% Winners 53% 64% 53% 54% 50% 63%
MDD 6/2/1931 6.30% -- 6/7/2010 4.75% -- 6/7/2011 4.48%
June
Since 1963, over all years, the OTC, in June, has been up 59% of the time with an average gain of 0.8%. During the 2nd year of the Presidential Cycle the OTC in June has been up 47% of the time with an average loss of -1.6%. The best June ever for the OTC was 2000 (+16.6%), the worst 2002 (-9.4%).
The average month has 21 trading days. The charts below have 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 June 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 58% of the time in June with an average gain of 0.8%. During the 2nd year of the Presidential Cycle the SPX has been up 42% of the time with an average loss of -1.3%. The best June ever for the SPX was 1938 (+24.7%) the worst 1930 (-16.5%).
The chart below is similar to the one above except it shows the average daily performance over all years since 1928 for the SPX in June 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 June with an average gain of 0.9%. During the 2nd year of the Presidential Cycle the R2K has been up 45% of the time with an average loss of -2.1%. The best June ever for the R2K, 2000 (+8.6%), the worst 2010 (-7.9%)
The chart below is similar to those above except it shows the average daily performance of the R2K, over all years since 1979, in June 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 48% of the time in June with an average gain of 0.2%. During the 2nd year of the Presidential Cycle the DJIA has been up 37% of the time in June with an average loss of -1.1%. The best June ever for the DJIA 1938 (+24.3%), the worst 1930 (-17.7%)
The chart below is similar to those above except it shows the average daily performance over all years for the DJIA in June in light grey and the average performance during the 2nd year of the Presidential Cycle in dark black.
February and May have also been down months during the 1st year of the Presidential Cycle. This year they both were very strong.
Conclusion
The market had a good week last week. All of the major indices hit all time highs and all of the breadth indicators moved upward.
May, typically a down month during the 2nd year of the Presidential ,was very strong.
The strongest sectors last week were Transportation and Precious Metals (up from the bottom last week) while the weakest were Utilities (down from the top last week) and Energy.
I expect the major averages to be higher on Friday June 5 than they were Friday May 29.
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