Technical Market Report For June 29, 2024
The good news is:
The NASDAQ composite (OTC) closed at an all time high last Thursday.
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 latest all time index high by a wide margin.
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.
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 stalled its decline as the index hit an all time high, but the value is extremely 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, but an upward move has not been clearly defined.
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 HL MoM appears to have turned upward while the direction of the others are unclear.
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 HL SI also appears to have turned upward.
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 moved more deeply into 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 finished the week in modestly positive territory.
Seasonality
Next week includes the first 4 trading days 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 1928 to 2023. There are summaries for both the 4th year of the Presidential Cycle and all years combined.
Average returns for the coming week have been modestly positive.
Report for the first 4 days of July.
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 Totals
1964-4 0.07% 3 0.62% 4 0.20% 1 0.10% 2 1.00%
1968-4 0.12% 1 0.36% 2 0.46% 3 0.67% 1 1.61%
1972-4 0.39% 1 0.53% 3 0.44% 4 -0.27% 5 1.09%
1976-4 -0.04% 4 0.66% 5 -0.29% 2 -0.02% 3 0.31%
1980-4 0.25% 2 0.64% 3 1.06% 4 1.72% 1 3.66%
Avg 0.16% 0.56% 0.37% 0.44% 1.53%
1984-4 -0.73% 1 0.16% 2 -0.19% 4 -0.47% 5 -1.23%
1988-4 0.01% 5 0.36% 2 -0.17% 3 -0.01% 4 0.20%
1992-4 0.96% 3 -0.99% 4 -0.03% 1 -1.02% 2 -1.09%
1996-4 1.05% 1 -0.52% 2 -0.81% 3 -1.96% 5 -2.24%
2000-4 0.65% 1 -3.23% 3 2.52% 4 1.58% 5 1.53%
Avg 0.39% -0.84% 0.27% -0.38% -0.57%
2004-4 -1.57% 4 -0.44% 5 -2.15% 2 0.13% 3 -4.03%
2008-4 0.52% 2 -2.32% 3 -0.27% 4 -0.09% 1 -2.16%
2012-4 0.55% 1 0.84% 2 0.00% 4 -1.30% 5 0.09%
2016-4 0.41% 5 -0.82% 2 0.75% 3 0.36% 4 0.71%
2020-4 0.95% 3 0.52% 4 2.21% 1 -0.86% 2 2.83%
Avg 0.17% -0.44% 0.11% -0.35% -0.51%
OTC summary for PY4 1964 - 2020
Averages 0.24% -0.24% 0.25% -0.10% 0.15%
% Winners 80% 60% 53% 40% 67%
MDD 7/6/2004 4.12% -- 7/5/1996 3.26% -- 7/5/2000 3.23%
OTC summary for all years 1963 - 2023
Averages 0.19% -0.15% 0.08% 0.17% 0.29%
% Winners 66% 51% 54% 54% 64%
MDD 7/6/2001 7.24% -- 7/2/2002 7.20% -- 7/7/2009 5.39%
SPX PY4
Day1 Day2 Day3 Day4 Totals
1928-4 -1.09% 1 1.63% 2 0.98% 4 -0.46% 5 1.06%
1932-4 3.84% 5 -2.17% 2 2.22% 3 -3.26% 4 0.62%
1936-4 0.40% 3 -0.13% 4 0.94% 5 -0.53% 1 0.68%
1940-4 -1.10% 1 -0.20% 2 0.30% 3 0.61% 5 -0.39%
1944-4 0.08% 6 0.92% 1 0.53% 3 -0.38% 4 1.16%
1948-4 -0.24% 4 0.90% 5 0.00% 2 -0.36% 3 0.30%
1952-4 0.64% 2 -0.24% 3 -0.04% 4 -0.32% 1 0.04%
1956-4 -0.09% 1 0.83% 2 1.01% 4 0.50% 5 2.26%
1960-4 0.25% 5 -0.07% 2 -0.14% 3 0.53% 4 0.56%
Avg 0.13% 0.47% 0.27% -0.01% 0.87%
1964-4 0.71% 3 0.40% 4 0.46% 1 0.17% 2 1.74%
1968-4 -0.18% 1 0.34% 2 1.17% 3 1.02% 1 2.36%
1972-4 0.33% 1 0.57% 3 0.87% 4 -0.32% 5 1.44%
1976-4 -0.66% 4 0.50% 5 -0.55% 2 0.28% 3 -0.43%
1980-4 0.60% 2 0.65% 3 1.54% 4 0.71% 1 3.50%
Avg 0.16% 0.49% 0.70% 0.37% 1.72%
1984-4 0.01% 1 0.33% 2 -0.61% 4 -0.34% 5 -0.61%
1988-4 -0.63% 5 1.48% 2 -1.37% 3 -0.09% 4 -0.61%
1992-4 1.16% 3 -0.27% 4 0.50% 1 -1.13% 2 0.26%
1996-4 0.78% 1 -0.34% 2 -0.18% 3 -2.22% 5 -1.96%
2000-4 1.01% 1 -1.57% 3 0.73% 4 1.52% 5 1.69%
Avg 0.47% -0.07% -0.19% -0.45% -0.24%
2004-4 -1.04% 4 -0.32% 5 -0.81% 2 0.19% 3 -1.98%
2008-4 0.38% 2 -1.82% 3 0.11% 4 -0.84% 1 -2.17%
2012-4 0.25% 1 0.62% 2 -0.47% 4 -0.94% 5 -0.54%
2016-4 0.19% 5 -0.68% 2 0.54% 3 -0.09% 4 -0.04%
2020-4 0.50% 3 0.45% 4 1.59% 1 -1.08% 2 1.46%
Avg 0.06% -0.35% 0.19% -0.55% -0.65%
SPX Summary for PY4 1928 - 2020
Averages 0.25% 0.08% 0.39% -0.29% 0.43%
% Winners 67% 54% 63% 38% 63%
MDD 7/7/1932 3.26% -- 7/5/1996 2.73% -- 7/7/2008 2.54%
SPX summary for all years 1928 - 2023
Averages 0.34% 0.16% 0.30% 0.07% 0.86%
% Winners 74% 59% 61% 57% 71%
MDD 7/7/2009 4.58% -- 7/2/2002 4.30% -- 7/6/2001 3.73%
July
Since 1963, over all years, the OTC in July has been up 57% of the time with an average gain of 0.9%. During the 4th year of the Presidential Cycle July has been up 53% time with 0.0% average change. The best July ever for the OTC was 2022 (+12.3%), the worst 2002 (-9.2%).
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 1st 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 1st trading day and at 5 trading day intervals after that. The line is solid on the 11th trading day, the dividing point.
In the chart below the blue line shows the average of the OTC in July over all years since 1963 while the green line shows the average during the 4th year of the Presidential Cycle over the same period.
Since 1928 the SPX has been up 60% of the time in July with an average gain of 1.7%. During the 4th year of the Presidential Cycle the SPX has been up 54% of the time with an average gain of 2.2% (helped by a 37.7% gain in 1932). The best July ever for the SPX was 1932 (+37.7%) the worst 1934 (-11.5%).
The chart below is similar to the one above except it shows the daily average performance over all years for the SPX in July in red and the performance during the 4th year of the Presidential Cycle in green.
Since 1979 the Russell 2000 (R2K) has been up 53% of the time in July with an average gain of 0.1%. During the 4th year of the Presidential Cycle the R2K has been up 45% of the time with an average change of 0.0%. The best July ever for the R2K, 1980 (+11.0%), the worst 2002 (-15.2%)
The chart below is similar to those above except it shows the daily performance over all years for the R2K in July in magenta and the performance during the 4th year of the Presidential Cycle in green.
Since 1885 the DJIA has been up 63% of the time in July with an average gain of 1.2%. During the 4th year of the Presidential Cycle the DJIA has been up 59% of the time in July with an average gain of 1.3%. The best July ever for the DJIA 1932 (+26.7%), the worst 1893 (-15.7%)
The chart below is similar to those above except it shows the daily performance over all years of the DJIA in July in grey and the performance during the 4th year of the Presidential Cycle in green.
Conclusion
The OTC closed at an all time high last Thursday while breadth was lousy.
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 modestly positive.
The strongest sectors last week were Technology and Finance (both for the 2nd week) while the weakest were Basic Materials and Utilities (also both for the 2nd week).
I expect the major averages to be higher on Friday July 6 than they were on Friday June 28.
Last week the Dow Jones Industrial Average and the SPX were down while the OTC and Russell 2000 were up; so I am calling last weeks negative forecast a tie.
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