Technical Market Report For October 18, 2025
The good news is:
- The Russell 2000 (R2K) closed at an all time high last Wednesday.
The Negatives
The first chart covers the last 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 continued to fall.
The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and OTC NH in green has been calculated with NYSE data.
NY NH also continued to decline.
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 has continued its sluggishly downward trajectory.
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 has also been moving slowly downward.
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 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 downward last week, but remained 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 lower, but remained in positive territory.
Seasonality
Next week includes the 5 trading days prior to the 4th Friday of October during the 1st 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 2024 while SPX data runs from 1953 to 2024. There are summaries for both the 1st 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 mixed and stronger during the 1st year of the Presidential Cycle than other years.
Report for the week before the 4th Friday of October.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.
OTC Presidential Year 1 (PY1)
Year Mon Tue Wed Thur Fri Totals
1965-1 0.41% 0.13% -0.15% 0.29% 0.16% 0.85%
1969-1 1.07% 0.34% 0.73% 2.26% 0.86% 5.26%
1973-1 -0.85% -0.43% 0.29% 0.16% 0.43% -0.40%
1977-1 -0.66% -1.08% 0.03% 0.22% 0.43% -1.06%
1981-1 -0.25% 0.77% 0.60% 0.03% -0.27% 0.88%
Avg -0.06% -0.05% 0.30% 0.59% 0.32% 1.10%
1985-1 -0.23% 0.29% 0.27% 0.44% -0.38% 0.39%
1989-1 -0.73% -1.18% 0.26% -1.02% -1.18% -3.86%
1993-1 -0.57% -1.81% -0.06% 0.39% 0.18% -1.87%
1997-1 1.12% 1.78% -0.43% -2.15% -1.22% -0.91%
2001-1 2.20% -0.21% 1.59% 2.54% -0.37% 5.75%
Avg 0.36% -0.23% 0.32% 0.04% -0.59% -0.10%
2005-1 1.61% -0.30% -0.45% -1.73% 1.26% 0.41%
2009-1 0.91% -0.59% -0.59% 0.68% -0.50% -0.10%
2013-1 0.15% 0.24% -0.57% 0.56% 0.37% 0.74%
2017-1 -0.63% 0.18% -0.52% -0.11% 2.19% 1.11%
2021-1 0.84% 0.71% -0.05% 0.62% -0.82% 1.30%
Avg 0.57% 0.05% -0.44% 0.01% 0.50% 0.69%
OTC summary for PY1 1965 - 2021
Avg 0.29% -0.08% 0.06% 0.21% 0.08% 0.57%
Win% 53% 53% 47% 73% 53% 60%
OTC summary or all years 1963 - 2024
Avg 0.11% -0.34% -0.11% 0.02% 0.01% -0.30%
Win% 56% 42% 48% 53% 56% 52%
SPX PY1
Year Mon Tue Wed Thur Fri Totals
1953-1 0.08% 0.04% 0.08% 0.45% 0.21% 0.87%
1957-1 -2.93% -0.43% 4.49% -0.05% -0.29% 0.79%
1961-1 -0.61% -0.12% 0.53% 0.18% -0.18% -0.20%
1965-1 0.33% 0.13% -0.02% 0.17% 0.04% 0.66%
1969-1 0.21% 0.77% 0.65% -0.38% 0.68% 1.92%
1973-1 -0.96% 0.54% 0.47% 0.21% 0.80% 1.06%
1977-1 -0.75% -0.69% 1.21% 0.26% 0.29% 0.33%
1981-1 -0.18% 1.09% -0.15% -0.38% -0.87% -0.49%
Avg -0.27% 0.37% 0.43% -0.02% 0.19% 0.70%
1985-1 -0.04% 0.58% 0.56% -0.31% -0.52% 0.26%
1989-1 -0.67% -0.33% -0.35% -1.33% -0.85% -3.53%
1993-1 -0.22% -0.48% -0.03% -0.15% -0.45% -1.33%
1997-1 1.21% 1.75% -0.39% -1.84% -0.95% -0.22%
2001-1 1.53% -0.47% 0.04% 1.37% 0.41% 2.88%
Avg 0.36% 0.21% -0.03% -0.45% -0.47% -0.39%
2005-1 1.68% -0.24% -0.43% -1.05% 1.65% 1.62%
2009-1 0.94% -0.62% -0.89% 1.06% -1.22% -0.72%
2013-1 0.01% 0.57% -0.47% 0.33% 0.44% 0.88%
2017-1 -0.40% 0.16% -0.47% 0.13% 0.81% 0.23%
2021-1 0.34% 0.74% 0.37% 0.30% -0.11% 1.64%
Avg 0.51% 0.12% -0.38% 0.15% 0.32% 0.73%
SPX summary for PY1 1953 - 2021
Avg -0.02% 0.17% 0.29% -0.06% -0.01% 0.37%
Win% 50% 56% 50% 56% 50% 67%
SPX summary for all years 1953 - 2024
Avg -0.11% -0.06% 0.05% -0.09% 0.00% -0.20%
Win% 57% 45% 52% 44% 48% 47%
Money supply (M2) and Interest Rates
The following chart was supplied by Gordon Harms.
The chart was made with FastTrack and covers the past 3 years showing the M2 money supply in red. This chart is more granular than previous M2 charts and shows money supply has been increasing since October of 2023.
Treasury rates - at their close last Friday and their changes from last month:
2yr yield 3.472% down from 3.562%
5yr yield 3.598% down from 3.636%
10yr yield 4.014% down from 4.070%
30yr yield 4.609% down from 4.683%
The next chart covers the past 2 years showing a relative comparison of US treasuries. 2 year in red, 5 year in grey, 10 year in green and 30 year in purple.
Conclusion
The market recovered from its slump a week ago Friday, but breadth suffered.
The strongest sectors last week were Utilities (for the 2nd week) and Health Care while the weakest were Energy and Banks (both for the 3rd week in a row).
I expect the major averages to be higher on Friday October 24 than they were on Friday October 17.
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