Technical Market Report For May 10, 2025
The good news is:
- The market has recovered from its 9 consecutive winning streak without much damage.
The Negatives
The first chart covers the past 6 months showing the Nasdaq composite (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 vertical lines have been drawn on the 1st trading day of each month and 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 is slightly negative.
The Positives
The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY HL ratio, in blue, has been calculated with NYSE data.
NY HL ratio remained in positive territory; not very deeply in positive territory, but positive.
The next 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 1st trading day of each month.
NY NH; Rising, modestly.
The next chart is similar to the 1st one except it shows the Nasdaq composite (OTC) in blue and OTC NH in green has been calculated with Nasdaq data.
OTC NH; Also rising modestly.
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 has been persistently positive.
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 has also performed as expected of a bottom indicator.
Seasonality
Next week includes the 5 trading days prior to the 3rd Friday of May during the 1st 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 1st 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 for next week has been mixed; stronger during the 1st year of the Presidential Cycle than other years.
Report for the week before the 3rd Friday of May.
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 -0.06% -0.35% -0.21% -0.23% -0.45% -1.31%
1969-1 0.18% -0.67% 0.36% 0.78% 0.36% 1.01%
1973-1 -2.42% -0.30% -0.04% -0.86% -2.19% -5.80%
1977-1 0.39% 0.11% 0.58% -0.11% -0.37% 0.61%
1981-1 -0.95% 0.16% 0.31% 0.65% 0.62% 0.78%
Avg -0.57% -0.21% 0.20% 0.05% -0.41% -0.94%
1985-1 0.24% -0.15% 0.21% 0.49% 0.67% 1.47%
1989-1 0.32% -0.13% 0.66% 0.29% 0.51% 1.65%
1993-1 0.24% 0.42% 1.42% 1.01% -0.45% 2.63%
1997-1 0.68% -0.79% 0.15% 1.35% -0.95% 0.44%
2001-1 -1.21% 0.18% 3.87% 1.26% 0.24% 4.34%
Avg 0.05% -0.09% 1.26% 0.88% 0.00% 2.11%
2005-1 0.89% 0.49% 1.32% 0.59% 0.19% 3.48%
2009-1 -0.45% -0.88% -3.01% 1.50% -0.54% -3.38%
2013-1 0.06% 0.69% 0.26% -0.18% 0.97% 1.81%
2017-1 0.46% 0.33% -2.57% 0.73% 0.47% -0.58%
2021-1 -0.38% -0.56% -0.03% 1.77% -0.48% 0.32%
Avg 0.12% 0.01% -0.81% 0.88% 0.12% 0.33%
OTC summary for PY1 1965 - 2021
Avg -0.13% -0.10% 0.22% 0.60% -0.09% 0.50%
Win% 60% 47% 67% 73% 53% 73%
OTC summary for all years 1963 - 2024
Avg -0.05% 0.01% -0.04% 0.05% -0.17% -0.20%
Win% 50% 45% 58% 52% 41% 48%
SPX PY1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.20% -0.68% -0.04% 0.49% -0.04% -0.48%
1957-1 0.62% -0.45% 0.34% 0.41% 0.28% 1.20%
1961-1 0.57% 0.37% 0.46% -0.59% 0.42% 1.23%
1965-1 -0.62% -0.09% 0.23% -0.55% -0.48% -1.50%
1969-1 -0.15% 0.43% 0.78% -0.29% 0.09% 0.85%
1973-1 -2.10% 0.63% -0.13% -0.82% -1.61% -4.03%
1977-1 0.44% 0.30% 0.53% -0.42% -0.43% 0.43%
1981-1 -1.48% 0.78% -0.13% 0.56% 0.68% 0.40%
Avg -0.78% 0.41% 0.26% -0.30% -0.35% -0.77%
1985-1 0.18% -0.40% 0.36% 0.61% 0.95% 1.70%
1989-1 0.74% -0.28% 0.70% 0.15% 1.03% 2.34%
1993-1 0.18% -0.01% 1.64% 0.69% -1.05% 1.44%
1997-1 1.56% -0.54% 0.35% 0.70% -1.44% 0.63%
2001-1 0.26% 0.04% 2.85% 0.27% 0.27% 3.69%
Avg 0.58% -0.24% 1.18% 0.48% -0.05% 1.96%
2005-1 1.01% 0.70% 1.00% 0.47% -0.15% 3.02%
2009-1 -2.15% -0.10% -2.69% 1.04% -1.14% -5.04%
2013-1 0.00% 1.01% 0.51% -0.50% 1.03% 2.06%
2017-1 0.48% -0.07% -1.82% 0.37% 0.68% -0.36%
2021-1 -0.25% -0.85% -0.29% 1.06% -0.08% -0.42%
Avg -0.18% 0.14% -0.66% 0.48% 0.07% -0.15%
SPX summary for PY1 1953 - 2021
Avg -0.05% 0.04% 0.26% 0.20% -0.06% 0.40%
Win% 61% 44% 67% 67% 50% 67%
SPX summary for all years 1953 - 2024
Avg -0.05% 0.03% -0.02% -0.01% -0.09% -0.14%
Win% 51% 50% 50% 51% 51% 47%
Conclusion
Considering the extremely overbought condition the market was in a week ago; it held up pretty well last week.
The seasonal pattern for the coming week is similar to last week.
The strongest sectors last week were Technology (for the 3rd week) and Banks while the weakest were Utilities and health care.
I expect the major averages to be higher on Friday May 16 than they were on Friday May 9.
Last week the Russell 2000 was up a little while the other major indices were down a little, so I am calling last week's positive forecast a tie.
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