The good news is:

• Seasonality for the coming week has been very strong.

 

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 new index high and has continued falling.  

 

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 continued to fall.

 

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 fell last week, but turned upward on Thursday.

 

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 continued to fall, but the decline was arrested Friday.

 

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.  

 

The NY SI Mom’s all continued falling last week.

 

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

 

The NASDAQ advance – decline and new high – new low SI’s continued falling while the volume SI began to decline. 

 

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 fell into modestly negative territory last week, but the decline was arrested on Friday.

 

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, but remained in positive territory.

 

Seasonality

Next week includes the first 5 trading days of June 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 1928 to 2023.  There are summaries for both the 4^th year of the Presidential Cycle and all years combined.  

 

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 first 5 days of June.

The number following the year represents its position in the Presidential Cycle.

The number following the daily return represents the day of the week;

1 = Monday, 2 = Tuesday etc.

 

OTC Presidential Year 4 (PY4)

               Day1      Day2      Day3      Day4      Day5      Totals

 1964-4      -0.08% 1  -0.15% 2  -0.10% 3  -0.10% 4  -0.49% 5    -0.92%

 1968-4       0.87% 1   0.69% 2   1.06% 3   0.32% 4   1.14% 5     4.08%

 1972-4       0.45% 4   0.29% 5  -0.58% 1  -0.56% 2  -0.76% 3    -1.15%

 1976-4      -0.26% 2   0.40% 3   0.11% 4  -0.58% 5  -0.60% 1    -0.93%

 1980-4      -0.19% 1  -0.17% 2   0.86% 3   0.66% 4   0.31% 5     1.48%

 

 Avg          0.16%     0.21%     0.27%    -0.05%    -0.08%       0.51%

 

 1984-4       1.32% 5   1.21% 1  -0.13% 2   0.44% 3   0.17% 4     3.01%

 1988-4       1.21% 3  -0.04% 4   0.59% 5   0.77% 1  -0.11% 2     2.41%

 1992-4       0.52% 1   0.14% 2   0.13% 3  -0.28% 4  -0.48% 5     0.02%

 1996-4      -0.38% 1   0.40% 2   0.44% 3  -1.34% 4  -0.22% 5    -1.09%

 2000-4       5.34% 4   6.45% 5   0.22% 1  -1.71% 2   2.21% 3    12.50%

 

 Avg          1.60%     1.63%     0.25%    -0.42%     0.31%       3.37%

 

 2004-4       0.20% 2  -0.09% 3  -1.44% 4   0.94% 5   2.12% 1     1.73%

 2008-4      -1.23% 1  -0.44% 2   0.91% 3   1.87% 4  -2.96% 5    -1.85%

 2012-4      -2.82% 5   0.46% 1   0.66% 2   2.40% 3  -0.48% 4     0.20%

 2016-4       0.08% 3   0.39% 4  -0.58% 5   0.53% 1  -0.14% 2     0.28%

 2020-4       0.66% 1   0.59% 2   0.78% 3  -0.69% 4   2.06% 5     3.39%

 

 Avg         -0.62%     0.18%     0.06%     1.01%     0.12%       0.75%

 

OTC summary for PY4 1964 - 2020

Averages      0.38%     0.67%     0.19%     0.18%     0.12%       1.54%

% Winners       60%       67%       67%       53%       40%         67%

MDD  6/6/2008  2.96% --  6/1/2012  2.82% --  6/7/1972  1.89%

 

OTC summary for all years 1963 - 2023

Averages      0.16%     0.45%     0.09%     0.11%     0.08%       0.90%

% Winners       58%       72%       57%       59%       52%         67%

MDD 6/7/2010  5.61% --  6/7/2002  4.97% --  6/7/2011  4.72%

 

SPX PY4

               Day1      Day2      Day3      Day4      Day5      Totals

 1928-4       0.35% 5   0.75% 6  -2.08% 1   0.25% 2  -0.96% 3    -1.68%

 1932-4      -1.57% 3   5.45% 4   5.39% 5   6.75% 6  -2.87% 1    13.15%

 1936-4      -0.07% 1   0.00% 2  -0.35% 3  -1.46% 4  -0.07% 5    -1.95%

 1940-4      -0.43% 6  -1.30% 1   1.32% 2  -1.52% 3   1.43% 4    -0.50%

 

 1944-4      -0.32% 4  -0.08% 5   0.08% 6  -0.65% 1   0.65% 2    -0.32%

 1948-4       0.30% 2   0.12% 3  -0.24% 4  -0.78% 5  -0.30% 1    -0.90%

 1952-4      -0.25% 1  -0.08% 2   0.71% 3   0.63% 4   0.66% 5     1.67%

 1956-4       0.84% 5   0.59% 1   0.02% 2  -0.50% 3   0.79% 4     1.74%

 1960-4       0.11% 3   0.43% 4   0.18% 5   1.17% 1   0.95% 2     2.84%

 

 Avg          0.13%     0.20%     0.15%    -0.03%     0.55%       1.01%

 

 1964-4      -0.32% 1  -0.51% 2  -0.26% 3  -1.03% 4   0.44% 5    -1.69%

 1968-4       1.33% 1   0.39% 2  -0.49% 3   0.76% 4   0.62% 5     2.61%

 1972-4       0.15% 4   0.04% 5  -0.83% 1  -0.56% 2  -0.52% 3    -1.72%

 1976-4      -0.33% 2   0.37% 3  -0.09% 4  -0.98% 5  -0.52% 1    -1.55%

 1980-4      -0.43% 1  -0.23% 2   1.90% 3   0.15% 4   0.37% 5     1.77%

 

 Avg          0.08%     0.01%     0.05%    -0.33%     0.08%      -0.12%

 

 1984-4       1.79% 5   0.72% 1  -0.45% 2   0.89% 3  -0.06% 4     2.88%

 1988-4       1.73% 3  -0.51% 4   0.42% 5   0.23% 1  -0.70% 2     1.16%

 1992-4       0.47% 1  -0.91% 2   0.26% 3  -0.32% 4   0.05% 5    -0.45%

 1996-4      -0.22% 1   0.73% 2   0.87% 3  -0.80% 4   0.04% 5     0.63%

 2000-4       1.99% 4   1.97% 5  -0.66% 1  -0.67% 2   0.93% 3     3.56%

 

 Avg          1.15%     0.40%     0.09%    -0.14%     0.05%       1.56%

 

 2004-4       0.05% 2   0.34% 3  -0.74% 4   0.52% 5   1.60% 1     1.76%

 2008-4      -1.05% 1  -0.58% 2  -0.03% 3   1.95% 4  -3.09% 5    -2.80%

 2012-4      -2.46% 5   0.01% 1   0.57% 2   2.30% 3  -0.01% 4     0.41%

 2016-4       0.11% 3   0.28% 4  -0.29% 5   0.49% 1   0.13% 2     0.72%

 2020-4       0.38% 1   0.82% 2   1.36% 3  -0.34% 4   2.62% 5     4.85%

 

 Avg         -0.60%     0.17%     0.17%     0.99%     0.25%       0.99%

 

SPX summary for PY4 1928 - 2020

Averages      0.09%     0.37%     0.27%     0.27%     0.09%       1.09%

% Winners       54%       63%       50%       50%       58%         58%

MDD  6/6/2008  3.09% --  6/6/1932  2.87% --  6/6/1928  2.77%

 

SPX summary for all years 1928 - 2023

Averages      0.00%     0.26%     0.17%     0.22%     0.03%       0.67%

% Winners       52%       63%       52%       55%       50%         63%

MDD 6/2/1931  6.30% --  6/7/2010  4.75% --  6/7/2011  4.48%

 

June

Since 1963, over all years, the OTC in June has been up 57% of the time with an average gain of 0.6%.  During the 4^th year of the Presidential Cycle June has been up 67% time with an average gain of 1.9%.  The average return was helped by a 16.6% gain in 2000.  The best June ever for the OTC was 2000 (+16.6%), the worst 2002 (-9.4%).

 

The average month has 21 trading days.  The chart below has been calculated by averaging the daily percentage change of the OTC for each of the 1^st 11 trading days and each of the last 10.  In months when there were more than 21 trading days some of the days in the middle were not counted.  In months when there were less than 21 trading days some of the days in the middle of the month were counted twice.  Dashed vertical lines have been drawn after the 1^st trading day and at 5 trading day intervals after that.  The line is solid on the 11^th trading day, the dividing point.

 

In the chart below the blue line shows the average of the OTC in June over all years since 1963 while the green line shows the average during the 4^th year of the Presidential Cycle over the same period.

 

Since 1928 the SPX has been up 57% of the time in June with an average gain of 0.8%.  During the 4^th year of the Presidential Cycle the SPX has been up 79% of the time with an average gain of 1.5%.  The best June ever for the SPX was 1938 (+24.7%) the worst 1930 (-16.5%).

 

The chart below is similar to the one above except it shows the daily average performance over all years for the SPX in June, in red and the performance during the 4^th year of the Presidential Cycle in green.

 

 

Since 1979 the Russell 2000 (R2K) has been up 64% of the time in June with an average gain of 0.8%.  During the 4^th year of the Presidential Cycle the R2K has been up 64% of the time with an average gain of 1.6%.  The best June ever for the R2K, 2000 (+8.6%), the worst 2022 (-8.4%)

 

The chart below is similar to those above except it shows the daily performance over all years of the R2K in June in magenta and the performance during the 4^th year of the Presidential Cycle in green.

 

Since 1885 the DJIA has been up 47% of the time in June with an average gain of 0.2%.  During the 4^th year of the Presidential Cycle the DJIA has been up 56% of the time in June with an average gain of 0.3%.  The best June ever for the DJIA 1938 (+24.3%), the worst 1930 (-17.7%)

 

The chart below is similar to those above except it shows the daily performance over all years of the DJIA in June in grey and the performance during the 4^th year of the Presidential Cycle in green.

 

Conclusion

Breadth was lousy on the first 2 days of last week and improved significantly on the last 2 days of last week.

Seasonality for the coming week has been very strong.

The strongest sectors last week were Telecomm and Utilities while the weakest were Internet and Banks (for the 2^nd week).

I expect the major averages to be higher on Friday June 7 than they were on Friday May 31. 

Last week the R2K was up while everything else was down.  So I am calling last weeks positive forecast a tie.

 

---

More By This Author:

Technical Market Report For May 25, 2024
Technical Market Report For May 18, 2024
Technical Market Report For May 11, 2024