Technical Market Report For April 5, 2025
The good news is:
- The bottom for this decline should be easy to identify by a sharp decrease in the number of new lows.
The Negatives
The first chart covers the last 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 find lower lows for the period shown.
The next chart is similar to the 1st one except it shows the Nasdaq composite (OTC) in blue and OTC NH in green has been calculated with Nasdaq data.
OTC NH ditto.
The next chart covers the past 6 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 (equal numbers of new highs and new lows).
NY HL ratio has remained in negative territory for over a month.
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 ditto.
The next chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good).
OTC NL is at its lowest level in nearly 3 years.
The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.
NY NL ditto.
The Positives
The positives are elusive.
Seasonality
Next week includes the 5 trading days prior to the 2nd Friday of April 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.
Seasonality for next week has been mixed and much stronger during the 1st year of the Presidential Cycle than other years.
Report for the week before the 2nd Friday of April.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.
OTC Presidential Year 1 (PY1)
Year Mon Tue Wed Thur Fri Totals
1965-1 0.37% 0.18% 0.16% 0.55% 0.57% 1.84%
1969-1 0.29% -0.21% -0.53% -0.70% 0.15% -1.00%
1973-1 0.65% 0.70% 0.42% 0.26% -0.32% 1.71%
1977-1 0.36% 0.73% 0.04% 0.95% 0.27% 2.35%
1981-1 -0.65% 0.23% 0.49% 0.52% 0.58% 1.18%
Avg 0.21% 0.33% 0.12% 0.32% 0.25% 1.22%
1985-1 0.16% 0.43% 0.37% -0.08% -0.11% 0.78%
1989-1 0.10% 0.58% 0.52% -0.44% 0.92% 1.69%
1993-1 1.02% 0.11% 0.02% -0.54% -0.53% 0.08%
1997-1 1.19% 0.48% -0.64% -1.09% -2.34% -2.40%
2001-1 -2.64% 0.71% 8.12% 4.94% -0.86% 10.28%
Avg -0.03% 0.46% 1.68% 0.56% -0.58% 2.08%
2005-1 0.32% 0.41% -0.01% 0.98% -0.96% 0.74%
2009-1 0.05% -1.67% 0.07% 2.68% 0.16% 1.28%
2013-1 0.57% 0.48% 1.83% 0.09% -0.16% 2.82%
2017-1 0.89% -0.12% 0.23% 0.92% -0.11% 1.81%
2021-1 -0.36% 1.05% -0.99% 1.31% 0.10% 1.11%
Avg 0.29% 0.03% 0.23% 1.20% -0.19% 1.55%
OTC summary for PY1 1965 - 2021
Avg 0.15% 0.27% 0.67% 0.69% -0.18% 1.62%
Win% 80% 80% 73% 67% 47% 87%
OTC summary for all years 1963 - 2024
Avg 0.04% 0.04% -0.06% 0.18% -0.28% -0.08%
Win% 61% 53% 55% 56% 52% 58%
SPX PY1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.20% 0.36% 0.40% -0.20% -1.16% -0.80%
1957-1 -0.22% 0.90% 0.42% -0.09% 0.22% 1.23%
1961-1 0.86% 0.14% -0.47% -0.08% 0.17% 0.62%
1965-1 0.00% -0.03% 0.06% 0.57% 0.60% 1.19%
1969-1 -0.08% -0.04% -0.89% 0.15% 0.46% -0.40%
1973-1 1.45% 1.22% 0.42% -0.09% -0.44% 2.55%
1977-1 0.64% 1.28% 0.01% 0.84% 0.04% 2.81%
1981-1 -1.15% -0.01% 0.75% -0.18% -0.12% -0.72%
Avg 0.21% 0.48% 0.07% 0.26% 0.11% 1.09%
1985-1 0.21% 0.15% 0.26% -0.46% 0.15% 0.32%
1989-1 -0.02% 0.46% 0.17% -0.87% 1.67% 1.42%
1993-1 1.48% 0.19% -0.12% -0.06% 0.12% 1.61%
1997-1 0.56% 0.52% -0.72% -0.30% -2.73% -2.66%
2001-1 -0.32% 1.03% 3.89% 1.26% -0.86% 4.99%
Avg 0.38% 0.47% 0.70% -0.09% -0.33% 1.14%
2005-1 0.27% 0.45% 0.23% 0.60% -0.83% 0.71%
2009-1 0.25% -2.01% 1.25% 1.55% 0.50% 1.55%
2013-1 0.63% 0.35% 1.22% 0.36% -0.28% 2.28%
2017-1 0.86% -0.29% -0.17% 0.76% -0.30% 0.85%
2021-1 -0.02% 0.33% -0.41% 1.11% 0.36% 1.37%
Avg 0.40% -0.23% 0.42% 0.87% -0.11% 1.35%
SPX summary for PY1 1953 - 2021
Avg 0.31% 0.28% 0.35% 0.27% -0.14% 1.05%
Win% 59% 72% 67% 50% 56% 78%
SPX summary for all years 1953 - 2024
Avg 0.13% 0.12% 0.01% 0.01% -0.08% 0.20%
Win% 59% 57% 53% 56% 51% 56%
Conclusion
There is no reason to believe this decline is over.
The sample is small. In my lifetime there have been only 2 market breadth events anything like what we are watching right now; 1987 and 2008.
In those 2 periods the market reached a bottom, rallied then declined again to retest the previous low. In 1987 the market rallied slowly off its retest low (which occurred about 6 weeks after the first low) while in 2008 it continued falling to a final low in April of 2009.
The strongest sectors last week were Utilities (for the 2nd week) and Biotech while the weakest were Electronics (for the 3rd week) and Internet.
I expect the major averages to be lower on Friday April 11 than they were on Friday April 4.
More By This Author:
Technical Market Report For March 29, 2025
Technical Market Report For March 22, 2025
Technical Market Report For March 15, 2025
Disclosure: None
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