The good news is:

• Seasonality for the coming week has been positive.

 

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 1^st trading day of each month.  

OTC NH failed to confirm the all time index high last month and has continued to deteriorate. 

(Click on image to enlarge)

The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NH in green has been calculated with NYSE data.  

NY NH also failed to confirm the SPX all time high and also has continued to deteriorate.

(Click on image to enlarge)

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 has fallen into negative territory.

(Click on image to enlarge)

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 fell into negative territory as new lows outnumbered new highs in 4 out of 5 days last week. 

(Click on image to enlarge)

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).  

New lows on the NASDAQ hit a very high level (597) last Monday and remained elevated all week.

(Click on image to enlarge)

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.

NYSE new lows were 221 last Monday then retreated to the 50’s for the rest of the week.

(Click on image to enlarge)

Summation indices are running totals of oscillator values.

Short term momentum indicators applied to summation indices make them nearly binary.

The next chart covers the past 6 months showing the SPX in red and momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE.  

NY SI MoM’s all resumed their downward move last week.

(Click on image to enlarge)

The next chart is similar to the NYSE chart above; except it shows the OTC, in blue and the SI MoM’s have been generated from NASDAQ breadth data. 

OTC SI MoM’s are all at or near the bottom. 

(Click on image to enlarge)

 

The Positives

Positives are a little hard to find, however, after a really bad day last Monday, the rest of the week improved.

 

Seasonality

Next week includes the 5 trading days prior to the 3^rd Friday of August during the 4^th 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 2023 while SPX data runs from 1953 to 2023.  There are summaries for both the 4^th 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.

 

Average returns for the coming week have been positive by all measures and stronger during the 4^th year of the Presidential Cycle than other years. 

 

Report for the week before the 3rd Friday of August.

The number following the year is the position in the Presidential Cycle.

Daily returns from Monday through 3rd Friday.

 

OTC Presidential Year 4 (PY4)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1964-4   0.22%   0.05%   0.17%   0.00%  -0.22%   0.22%

 1968-4   0.21%   0.46%   0.00%   0.65%   0.46%   1.78%

 1972-4   0.02%  -0.17%  -0.01%  -0.50%   0.48%  -0.19%

 1976-4  -0.04%   0.26%  -0.17%  -1.21%  -0.61%  -1.77%

 1980-4   0.70%  -0.28%   0.23%   0.98%   0.63%   2.26%

 

 Avg      0.22%   0.06%   0.05%  -0.02%   0.15%   0.46%

 

 1984-4  -0.43%  -0.29%  -0.37%   0.25%   0.02%  -0.82%

 1988-4  -1.29%   0.43%   0.15%   0.27%   0.05%  -0.39%

 1992-4  -0.12%  -0.28%  -0.57%   0.04%  -0.73%  -1.66%

 1996-4   0.09%  -1.06%   0.65%   0.11%  -0.09%  -0.31%

 2000-4   1.59%   0.05%   0.25%   2.06%  -0.27%   3.68%

 

 Avg     -0.03%  -0.23%   0.02%   0.55%  -0.20%   0.10%

 

 2004-4   1.46%   0.70%   2.01%  -0.63%   1.00%   4.54%

 2008-4   1.07%  -0.38%  -0.08%   1.03%  -0.05%   1.59%

 2012-4   0.05%  -0.18%   0.46%   1.04%   0.46%   1.84%

 2016-4   0.56%  -0.66%   0.03%   0.22%  -0.03%   0.11%

 2020-4   1.00%   0.73%  -0.57%   1.06%   0.42%   2.64%

 

 Avg      0.83%   0.04%   0.37%   0.55%   0.36%   2.14%

 

OTC summary for PY4 1964 - 2020 

 Avg      0.34%  -0.04%   0.15%   0.38%   0.10%   0.90%

 Win%       73%     47%     57%     79%     53%     60%

 

OTC summary for all years 1963 - 2023

 Avg      0.25%  -0.02%   0.06%  -0.16%  -0.09%   0.05%

 Win%       67%     47%     56%     53%     54%     51%

 

SPX PY4

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1956-4  -1.04%   0.66%   0.18%  -0.22%  -0.12%  -0.54%

 1960-4  -0.09%   0.19%   0.21%  -0.05%   0.35%   0.62%

 

 1964-4   0.01%   0.05%  -0.10%  -0.46%   0.16%  -0.34%

 1968-4   1.03%   0.53%   0.00%  -0.47%   0.62%   1.72%

 1972-4   0.54%  -0.44%  -0.36%  -0.29%   0.38%  -0.17%

 1976-4   0.17%   0.35%  -0.23%  -1.12%  -0.99%  -1.81%

 1980-4   0.95%  -0.79%  -0.41%   1.60%   0.38%   1.71%

 

 Avg      0.54%  -0.06%  -0.27%  -0.15%   0.11%   0.22%

 

 1984-4   0.01%  -0.61%  -0.99%   0.60%   0.23%  -0.77%

 1988-4  -0.88%   0.12%   0.08%   0.10%  -0.30%  -0.88%

 1992-4   0.20%   0.14%  -0.75%   0.02%  -0.82%  -1.21%

 1996-4   0.55%  -0.84%   0.28%   0.04%   0.44%   0.47%

 2000-4   1.34%  -0.48%  -0.31%   1.10%  -0.29%   1.36%

 

 Avg      0.24%  -0.33%  -0.34%   0.37%  -0.15%  -0.20%

 

 2004-4   1.37%   0.22%   1.24%  -0.36%   0.65%   3.12%

 2008-4   0.69%  -1.21%  -0.29%   0.55%   0.41%   0.16%

 2012-4  -0.13%  -0.01%   0.11%   0.71%   0.19%   0.87%

 2016-4   0.28%  -0.55%   0.19%   0.22%  -0.14%  -0.01%

 2020-4   0.27%   0.23%  -0.44%   0.32%   0.34%   0.72%

 

 Avg      0.50%  -0.26%   0.16%   0.29%   0.29%   0.97%

 

SPX summary for PY4 1956 - 2020 

 Avg      0.31%  -0.14%  -0.10%   0.13%   0.09%   0.30%

 Win%       76%     53%     44%     59%     65%     53%

 

SPX summary for all years 1953 - 2023

 Avg      0.17%   0.00%  -0.10%  -0.09%   0.02%   0.01%

 Win%       66%     49%     53%     52%     58%     49%

 

Conclusion

Last Monday was a really bad day, but, the rest of the week stabilized.

Seasonality for the coming week is positive and the market is, at least, due for a bounce.

The strongest sectors last week were Utilities (for the 4^th week in a row) and Telecomm while the weakest were Precious Metals and Energy services.

I expect the major averages to be higher on Friday August 16 than they were on Friday August 9. 

Last weeks positive forecast was a miss.

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