Technical Market Report For July 6, 2024
The good news is:
- The NASDAQ composite (OTC) and S&P 500 (SPX) both closed at an all time highs last Friday.
The Negatives
The first chart covers the last 6 months showing the 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 failed to confirm the all time index high by a wide margin.
The next chart is similar to the one above except it shows the 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.
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 remained at a very high (negative) level as the index made an all time high.
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 also stalled at a high level (bad) while the SPX hit all time highs.
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 remained in negative territory.
The Positives
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 rose slightly in modestly positive territory.
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 have all gone positive.
The next chart is similar to the one above; except it shows the OTC, in blue and the SI MoM’s have been generated from NASDAQ breadth data.
OTC SI MoM’s have also turned upward.
(Click on image to enlarge)
Seasonality
Next week includes the 5 trading days prior to the 2nd Friday of July during the 4th 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 4th 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.
Report for the week before the 2nd Friday of July.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.
OTC Presidential Year 4 (PY4)
Year Mon Tue Wed Thur Fri Totals
1964-4 0.05% 0.15% 0.22% 0.20% 0.37% 0.98%
1968-4 -0.06% 0.19% 0.00% -0.20% -0.28% -0.35%
1972-4 -0.49% -0.29% -0.28% -0.83% 0.27% -1.62%
1976-4 0.00% -0.29% -0.02% 0.21% 0.76% 0.66%
1980-4 1.03% 0.32% 0.03% 0.94% 0.78% 3.10%
Avg 0.13% 0.02% -0.01% 0.06% 0.38% 0.55%
1984-4 0.11% -0.31% -0.61% -0.26% 0.19% -0.87%
1988-4 0.00% 0.36% -0.17% -0.01% -0.28% -0.09%
1992-4 0.43% 0.88% 0.05% 0.13% -0.98% 0.49%
1996-4 -0.83% 0.42% -1.06% -3.08% -0.25% -4.80%
2000-4 -1.07% -0.60% 3.62% 1.84% 1.71% 5.50%
Avg -0.34% 0.15% 0.37% -0.27% 0.08% 0.05%
2004-4 0.00% -2.15% 0.13% -1.56% 0.57% -3.01%
2008-4 -1.17% 0.13% 3.12% 1.20% -1.28% 2.00%
2012-4 -0.19% -1.00% -0.49% -0.75% 1.48% -0.97%
2016-4 0.00% -0.82% 0.75% 0.36% 1.64% 1.94%
2020-4 -2.13% 0.94% 0.59% -0.73% 0.28% -1.05%
Avg -1.16% -0.58% 0.82% -0.30% 0.54% -0.22%
OTC summary for PY4 1964 - 2020
Avg -0.39% -0.14% 0.42% -0.17% 0.33% 0.13%
Win% 36% 53% 57% 47% 67% 47%
OTC summary for all years 1963 - 2023
Avg 0.05% -0.04% 0.37% 0.34% 0.43% 1.12%
Win% 67% 56% 63% 66% 77% 70%
SPX PY4
Year Mon Tue Wed Thur Fri Totals
1956-4 0.44% 0.60% 0.31% -0.23% 0.29% 1.41%
1960-4 0.00% -0.07% -0.14% 0.53% 0.24% 0.56%
1964-4 -0.06% -0.30% 0.34% 0.36% 0.44% 0.78%
1968-4 -0.08% -0.55% 0.00% -0.26% -0.97% -1.85%
1972-4 -0.53% -0.73% -0.40% -0.57% 0.49% -1.75%
1976-4 0.00% -0.55% 0.28% 0.14% 0.96% 0.84%
1980-4 1.84% -0.59% 0.28% 1.51% 0.49% 3.53%
Avg 0.29% -0.54% 0.12% 0.24% 0.28% 0.31%
1984-4 0.74% -0.31% -1.52% -0.35% 0.57% -0.88%
1988-4 0.00% 1.48% -1.37% -0.09% -0.65% -0.63%
1992-4 0.06% 0.68% -0.14% 0.11% -0.46% 0.24%
1996-4 -0.75% 0.34% 0.20% -1.59% 0.08% -1.71%
2000-4 -0.22% 0.36% 0.81% 0.19% 0.95% 2.09%
Avg -0.04% 0.51% -0.41% -0.35% 0.10% -0.18%
2004-4 0.00% -0.81% 0.19% -0.82% 0.33% -1.12%
2008-4 -0.90% -1.09% 2.51% 1.20% 0.03% 1.74%
2012-4 -0.16% -0.81% 0.00% -0.50% 1.65% 0.17%
2016-4 0.00% -0.68% 0.54% -0.09% 1.53% 1.29%
2020-4 -0.94% 1.34% 0.91% -0.34% 0.28% 1.26%
Avg -0.67% -0.41% 0.83% -0.11% 0.76% 0.67%
SPX summary for PY4 1956 - 2020
Avg -0.05% -0.10% 0.17% -0.05% 0.37% 0.35%
Win% 33% 35% 63% 41% 82% 65%
SPX summary for all years 1953 - 2023
Avg 0.05% 0.00% 0.28% 0.18% 0.31% 0.80%
Win% 60% 48% 61% 61% 69% 72%
Conclusion
The OTC and SPX closed at an all time highs last Friday while breadth was unimproved.
Leadership has narrowed to the point that the capitalization weighted indices are supported by only a few issues.
Seasonality for the coming week has been positive.
The strongest sectors last week were Precious Metals and Electronics while the weakest were Basic Materials and Utilities (also both for the 3rd. week).
I expect the major averages to be higher on Friday July 12 than they were on Friday July 5.
Last week the Russell 2000 was down while the other indices were up; so I am calling last weeks positive forecast a tie.
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