The good news

• The Nasdaq composite (OTC) closed at an all time high last Wednesday and the S&P 500 (SPX) 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 1^st trading day of each month.  

OTC NH failed to confirm the, all time, new index high.  

(Click on image to enlarge)

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.

(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).  

OTC NL continued its decline as the index hit an all time high.

(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.

NY NL continued falling while the SPX hit its all time high.

(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 UD SI Mom briefly turned upward last week before turning back downward Friday.  All the NY SI’s are heading south.

(Click on image to enlarge)

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. 

OTC HL SI briefly turned upward last week before joining the other SI’s in their declines. 

(Click on image to enlarge)

 

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 remained in modestly negative territory last week.

(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 remained in positive territory.

(Click on image to enlarge)

 

Seasonality

Next week includes the 5 trading days prior to the 2^nd Friday 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 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 modest and mixed and stronger during the 4^th year of the Presidential Cycle than other years. 

 

Report for the week before the 2nd Friday of June.

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  -0.03%  -0.46%   0.44%   0.41%   0.13%   0.49%

 1968-4   0.38%  -0.71%   0.00%   0.21%  -0.32%  -0.44%

 1972-4  -0.58%  -0.56%  -0.76%   0.05%  -0.38%  -2.23%

 1976-4  -0.60%  -0.11%  -0.20%   0.41%   0.46%  -0.04%

 1980-4   0.21%   0.75%   0.69%   0.06%   0.82%   2.54%

 

 Avg     -0.12%  -0.22%   0.05%   0.23%   0.14%   0.06%

 

 1984-4   1.21%  -0.13%   0.44%   0.17%   0.19%   1.88%

 1988-4   0.77%  -0.11%   1.08%   0.31%   0.43%   2.47%

 1992-4  -0.58%  -1.41%  -0.71%  -0.36%   0.32%  -2.74%

 1996-4   0.02%   0.07%   0.37%  -0.79%  -1.01%  -1.35%

 2000-4   0.22%  -1.71%   2.21%  -0.36%   1.29%   1.65%

 

 Avg      0.33%  -0.66%   0.68%  -0.21%   0.24%   0.38%

 

 2004-4  -1.49%   1.30%   0.13%  -0.73%   0.15%  -0.64%

 2008-4  -0.61%  -0.43%  -2.24%   0.43%   2.09%  -0.76%

 2012-4   0.46%   0.66%   2.40%  -0.48%   0.97%   4.00%

 2016-4   0.53%  -0.14%   0.26%  -0.32%  -1.29%  -0.96%

 2020-4   1.13%   0.29%   0.67%  -5.27%   1.01%  -2.16%

 

 Avg      0.00%   0.34%   0.24%  -1.27%   0.59%  -0.11%

 

OTC summary for PY4 1964 - 2020 

 Avg      0.07%  -0.18%   0.34%  -0.42%   0.32%   0.11%

 Win%       60%     33%     71%     53%     73%     40%

 

OTC summary for all years 1963 - 2023

 Avg     -0.13%  -0.13%   0.02%  -0.05%  -0.01%  -0.30%

 Win%       52%     34%     52%     63%     59%     39%

 

SPX PY4

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1956-4   0.59%   0.02%  -0.50%   0.79%  -1.85%  -0.95%

 1960-4   1.17%   0.95%   0.80%   0.19%  -0.05%   3.06%

 

 1964-4  -0.48%   0.64%   0.38%   0.37%  -0.16%   0.74%

 1968-4   0.14%   0.25%   0.00%  -0.40%  -0.12%  -0.14%

 1972-4  -0.83%  -0.56%  -0.52%  -0.34%  -0.39%  -2.64%

 1976-4  -0.52%   0.17%  -0.06%   0.83%   1.37%   1.78%

 1980-4   0.45%   0.84%   1.19%  -0.43%   0.25%   2.29%

 

 Avg     -0.25%   0.27%   0.25%   0.00%   0.19%   0.41%

 

 1984-4   0.72%  -0.45%   0.89%  -0.06%   0.16%   1.26%

 1988-4   0.23%  -0.70%   2.39%  -0.49%   0.39%   1.82%

 1992-4  -0.03%  -0.80%  -0.69%   0.44%   0.17%  -0.90%

 1996-4  -0.17%  -0.18%  -0.29%  -0.17%  -0.31%  -1.11%

 2000-4  -0.66%  -0.67%   0.93%  -0.66%  -0.32%  -1.37%

 

 Avg      0.02%  -0.56%   0.65%  -0.19%   0.02%  -0.06%

 

 2004-4  -0.98%   0.60%   0.14%  -0.13%   0.26%  -0.12%

 2008-4   0.08%  -0.24%  -1.69%   0.33%   1.50%  -0.02%

 2012-4   0.01%   0.57%   2.30%  -0.01%   0.81%   3.69%

 2016-4   0.49%   0.13%   0.33%  -0.17%  -0.92%  -0.14%

 2020-4   1.20%  -0.78%  -0.53%  -5.89%   1.31%  -4.70%

 

 Avg      0.16%   0.06%   0.11%  -1.18%   0.59%  -0.26%

 

SPX summary for PY4 1956 - 2020 

 Avg      0.08%  -0.01%   0.32%  -0.34%   0.12%   0.15%

 Win%       59%     53%     56%     35%     53%     41%

 

SPX summary for all years 1953 - 2023

 Avg     -0.17%  -0.05%   0.02%  -0.02%   0.10%  -0.12%

 Win%       46%     45%     46%     58%     59%     46%

 

Conclusion

The SPX and OTC hit all time highs last week while breadth was lousy.

Seasonality for the coming week has been unremarkable.

The strongest sectors last week were Health care and Electronics while the weakest were Precious metals and Energy.

I expect the major averages to be lower on Friday June 14 than they were on Friday June 7. 

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

 

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