The good news is:

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

 

The Negatives

The first chart covers the last 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 1^st trading day of each month.  

NY NH failed to confirm the latest all time high for the SPX.

 

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 the OTC all time high last Friday.

 

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; NYSE new lows have been increasing and are approaching threatening levels.

 

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.

Nasdaq new lows increased while the index was making new all time highs.

 

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 rose modestly last week finishing the week 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 rose modestly last week. 

 

Seasonality

Next week includes the 5 trading days prior to the 3^rd Friday of August during the 1^st 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 1^st 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. 

Seasonally the coming week has been mixed and weaker during the 1^st 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 1 (PY1)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1965-1   0.70%  -0.22%   0.26%   0.24%  -0.26%   0.72%

 1969-1  -0.29%  -0.79%  -0.94%  -0.10%   0.42%  -1.71%

 1973-1  -0.92%  -0.73%  -0.23%  -0.04%   0.39%  -1.53%

 1977-1   0.13%  -0.24%   0.07%   0.14%  -0.01%   0.09%

 1981-1  -1.16%  -1.26%   0.10%   0.36%  -0.58%  -2.54%

 

 Avg     -0.31%  -0.65%  -0.15%   0.12%  -0.01%  -1.00%

 

 1985-1  -0.28%  -0.43%   0.21%  -0.01%  -0.39%  -0.90%

 1989-1  -1.40%   1.08%  -0.03%   0.01%   0.25%  -0.09%

 1993-1   1.20%   0.57%   0.52%  -0.59%   0.07%   1.76%

 1997-1  -0.73%  -0.67%   0.46%   0.21%  -1.56%  -2.29%

 2001-1   1.32%  -0.89%  -2.32%   0.60%  -3.28%  -4.58%

 

 Avg      0.02%  -0.07%  -0.23%   0.04%  -0.98%  -1.22%

 

 2005-1   0.47%  -1.38%   0.38%  -0.42%  -0.02%  -0.98%

 2009-1  -2.75%   1.30%   0.68%   1.01%   1.59%   1.83%

 2013-1   0.27%   0.39%  -0.41%  -1.72%  -0.09%  -1.56%

 2017-1   1.33%  -0.11%   0.19%  -1.93%  -0.09%  -0.61%

 2021-1  -0.20%  -0.93%  -0.89%   0.11%   1.19%  -0.72%

 

 Avg     -0.18%  -0.15%  -0.01%  -0.59%   0.52%  -0.41%

 

OTC summary for PY1 1965 - 2021 

 Avg     -0.15%  -0.29%  -0.13%  -0.14%  -0.16%  -0.87%

 Win%       47%     27%     60%     53%     40%     27%

 

OTC summary for all years 1963 - 2024

 Avg      0.25%   0.02%   0.06%  -0.12%  -0.09%   0.13%

 Win%       68%     48%     57%     54%     55%     52%

 

SPX PY1

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1953-1  -0.24%  -0.41%  -0.61%  -0.08%   0.25%  -1.10%

 1957-1  -1.26%  -0.06%  -1.23%   0.04%   0.17%  -2.33%

 1961-1  -0.50%  -0.25%   0.27%   0.56%   0.26%   0.34%

 

 1965-1   0.12%   0.20%  -0.06%  -0.23%  -0.12%  -0.09%

 1969-1  -0.62%  -0.78%   0.08%   0.69%   0.71%   0.07%

 1973-1  -1.01%  -0.96%   0.29%  -0.70%   0.02%  -2.36%

 1977-1   0.31%  -0.46%   0.01%  -0.06%  -0.17%  -0.38%

 1981-1  -0.96%  -0.85%   0.29%   0.15%  -1.12%  -2.48%

 

 Avg     -0.43%  -0.57%   0.12%  -0.03%  -0.14%  -1.05%

 

 1985-1  -0.37%  -0.18%   0.06%  -0.08%  -0.62%  -1.18%

 1989-1  -0.49%   0.48%   0.28%  -0.35%   0.46%   0.38%

 1993-1   0.50%   0.17%   0.64%   0.09%  -0.06%   1.33%

 1997-1   0.37%  -1.12%  -0.49%   0.30%  -2.59%  -3.53%

 2001-1   0.09%  -0.38%  -0.73%   0.31%  -1.67%  -2.38%

 

 Avg      0.02%  -0.21%  -0.05%   0.05%  -0.90%  -1.08%

 

 2005-1   0.28%  -1.18%   0.07%  -0.10%   0.06%  -0.86%

 2009-1  -2.43%   1.01%   0.69%   1.09%   1.86%   2.23%

 2013-1  -0.12%   0.28%  -0.52%  -1.43%  -0.33%  -2.11%

 2017-1   1.00%  -0.05%   0.14%  -1.54%  -0.18%  -0.63%

 2021-1   0.26%  -0.71%  -1.07%   0.13%   0.81%  -0.58%

 

 Avg     -0.20%  -0.13%  -0.14%  -0.37%   0.44%  -0.39%

 

SPX summary for PY1 1953 - 2021 

 Avg     -0.28%  -0.29%  -0.11%  -0.07%  -0.13%  -0.87%

 Win%       44%     28%     61%     50%     50%     28%

 

SPX summary for all years 1953 - 2024

 Avg      0.17%   0.02%  -0.10%  -0.06%   0.03%   0.06%

 Win%       67%     50%     54%     53%     58%     50%

 

Conclusion

Last week all of the major indices moved upward taking the SPX and OTC to new all time highs.  The breadth indicators did not do as well.

The strongest sectors last week were Precious Metals and Internet while the weakest were Energy and Leisure.

I expect the major averages to be lower on Friday Aug 15 than they were on Friday August 8.

Last week's negative forecast was a miss.

 

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