Technical Market Report For May 20, 2023
The good news is:
- The NASDAQ composite (OTC) & S&P 500 closed at their highs for this year last Thursday.
The Negatives
The first 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 vertical lines have been drawn on the first trading day of each month. 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 up last week but, remained below the neutral level.
(Click on image to enlarge)
The next chart covers the last 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 moved upward last week, but remains at a dangerously high number.
(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 moved sideways at an uncomfortably high level.
(Click on image to enlarge)
The next 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 brown.
OTC NH is a long way from confirming the new OTC 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 has been calculated with NYSE data.
The pattern is similar to the chart above.
(Click on image to enlarge)
The Positives
Big tech is all that is pushing up the OTC and SPX.
The next chart is similar to the first one except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data.
NY HL ratio moved into positive territory Friday.
(Click on image to enlarge)
Summation indices are running totals of oscillator values.
Short term momentum indicators applied to summation indices make them binary so position is all that matters.
The next chart covers the past 6 months showing momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE.
NYSE SI’s momentum indicators turned upward last week.
(Click on image to enlarge)
The next chart is similar to the one above, except is shows the OTC as the index and the SI’s have been generated from NASDAQ data.
All the momentum indicators of NASDAQ SI’s moved upward last week.
(Click on image to enlarge)
Seasonality
Next week includes the 5 trading days prior to the 4th Friday of May during the 3rd 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 2022 while SPX data runs from 1953 to 2022. There are summaries for both the 3rd 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 mixed.
Report for the week before the 4th Friday of May.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.
OTC Presidential Year 3 (PY3)
Year Mon Tue Wed Thur Fri Totals
1963-3 -0.06% -0.18% 0.03% -0.09% 0.00% -0.30%
1967-3 0.15% -0.08% -0.32% -0.90% 0.87% -0.28%
1971-3 -0.40% -0.85% 0.03% 0.07% 0.60% -0.55%
1975-3 -0.55% -0.17% -1.10% 0.75% 1.30% 0.24%
1979-3 0.11% 0.56% 0.17% -0.02% 0.44% 1.27%
Avg -0.15% -0.14% -0.24% -0.04% 0.80% 0.07%
1983-3 0.10% 1.15% 0.59% 0.72% 0.21% 2.77%
1987-3 -1.27% -1.30% -0.39% 0.47% -0.26% -2.76%
1991-3 -0.27% 0.73% 0.76% 0.47% 0.63% 2.33%
1995-3 0.76% 0.97% -0.19% -0.08% -0.62% 0.85%
1999-3 -2.63% -2.97% 1.81% -0.20% 2.12% -1.87%
Avg -0.66% -0.28% 0.52% 0.28% 0.42% 0.26%
2003-3 -2.97% -0.11% -0.08% 1.19% 0.17% -1.81%
2007-3 0.80% 0.36% -0.42% -1.52% 0.76% -0.03%
2011-3 -1.58% -0.46% 0.55% 0.78% 0.50% -0.21%
2015-3 0.60% -0.17% 0.03% 0.38% -0.03% 0.81%
2019-3 -1.46% 1.08% -0.45% -1.58% 0.11% -2.29%
Avg -0.92% 0.14% -0.07% -0.15% 0.30% -0.71%
OTC summary for PY3 1963 - 2019
Avg -0.58% -0.10% 0.07% 0.03% 0.49% -0.12%
Win% 40% 40% 53% 53% 79% 40%
OTC summary for all years 1963 - 2022
Avg 0.03% -0.19% 0.11% 0.16% 0.19% 0.29%
Win% 49% 40% 60% 57% 64% 60%
Year 3
Year Mon Tue Wed Thur Fri Totals
1955-3 -0.69% -0.05% 0.37% 0.66% 0.21% 0.51%
1959-3 -0.02% 0.29% -0.39% 0.09% 0.33% 0.29%
1963-3 -0.47% 0.26% 0.00% -0.06% -0.11% -0.38%
1967-3 -0.43% -0.48% -1.15% 1.12% -0.23% -1.18%
1971-3 -0.85% -0.66% 0.12% -0.19% 0.23% -1.35%
1975-3 0.11% -0.51% -1.12% 0.37% 1.33% 0.18%
1979-3 0.21% 0.37% -0.63% 0.05% 0.29% 0.29%
Avg -0.29% -0.20% -0.69% 0.26% 0.30% -0.49%
1983-3 0.80% 1.29% 0.40% -0.44% -0.62% 1.44%
1987-3 -0.27% -2.45% -0.50% 0.70% 0.71% -1.81%
1991-3 -0.03% 0.82% 0.22% -0.32% 0.67% 1.37%
1995-3 0.86% 0.94% 0.00% 0.00% -0.93% 0.87%
1999-3 -1.77% -1.71% 1.59% -1.79% 1.59% -2.09%
Avg -0.08% -0.22% 0.34% -0.37% 0.28% -0.05%
2003-3 -2.49% -0.11% 0.40% 0.92% 0.14% -1.14%
2007-3 0.15% -0.06% -0.12% -0.97% 0.55% -0.46%
2011-3 -1.19% -0.08% 0.32% 0.40% 0.41% -0.15%
2015-3 0.30% -0.06% -0.09% 0.23% -0.22% 0.16%
2019-3 -0.67% 0.85% -0.28% -1.19% 0.14% -1.16%
Avg -0.78% 0.11% 0.04% -0.12% 0.20% -0.55%
SPX summary for PY3 1955 - 2019
Avg -0.38% -0.08% -0.05% -0.03% 0.26% -0.27%
Win% 35% 41% 50% 53% 71% 47%
SPX summary for all years 1953 - 2022
Avg 0.01% -0.12% -0.05% 0.06% 0.12% 0.01%
Win% 49% 44% 52% 54% 63% 59%
Conclusion
This looks like a blow off.
The strongest sectors last week were Technology and Banks while the weakest were Utilities and Precious Metals.
I expect the major averages to be lower on Friday May 26 than they were on Friday May 19.
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