The good news is the market had another good week.

The Negatives

Everything is fake. The Fed announced they were going to start buying junk bonds and described how they were going to do it. It is illegal, but, so what, they are doing it with fake money. If they are going as low as junk bonds you can assume everything of higher quality, that is, everything by which a political assessment can be made is under the control of the political authorities. Everything is fake.

The first chart covers the past six 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 of the 1st trading day of each month.

The weakness of OTC NH indicates minimal broad market support. All that matters politically is the index is going up.

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.

Ditto NYSE.

The Positives

There have been no new lows. The Fed is buying everything including junk.

The next chart covers the past six months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

NY HL Ratio is high because there are no new lows.  

The next chart is similar to the one above except it shows the OTC in blue and OTC HL Ratio, in red has been calculated with Nasdaq data.

Ditto OTC HL Ratio..

Seasonality

Next week includes the first five trading days of June during the fourth 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 2019 while SPX data runs from 1928 to 2019. There are summaries for both the fourth year of the Presidential Cycle and all years combined. 

Returns for the coming week have been positive by all measures.

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%

 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%

 Avg0.50% 0.31% 0.38% 0.05%-0.07% 1.17%

 2000-4 5.34% 4 6.45% 5 0.22% 1-1.71% 2 2.21% 312.50%

 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%

 Avg0.31% 1.35%-0.05% 0.80% 0.15% 2.57%

OTC summary for PY4 1964 - 2016

Averages 0.36% 0.68% 0.15% 0.24%-0.02% 1.41%

% Winners 57% 64% 64% 57% 36% 64%

MDD6/6/20082.96% --6/1/20122.82% --6/7/19721.89%

OTC summary for all years 1963 - 2019

Averages 0.15% 0.41% 0.15% 0.09% 0.05% 0.85%

% Winners 59% 70% 60% 58% 51% 65%

MDD 6/7/20105.61% --6/7/20024.97% --6/7/20114.72%

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% 113.15%

 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%

 Avg0.03%-0.15% 0.38%-0.56% 0.65% 0.34%

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

 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%

 Avg0.19% 0.14%-0.30%-0.13% 0.19% 0.10%

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

 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%

 Avg0.67%-0.04% 0.60% 0.03%-0.06% 1.20%

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

 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%

 Avg -0.27% 0.40%-0.23% 0.92%-0.09% 0.73%

SPX summary for PY4 1928 - 2016

Averages0.08% 0.35% 0.23% 0.30%-0.02% 0.93%

% Winners 52% 61% 48% 52% 57% 57%

MDD6/6/20083.09% --6/6/19322.87% --6/6/19282.77%

SPX summary for all years 1928 - 2019

Averages -0.01% 0.22% 0.19% 0.22% 0.00% 0.61%

% Winners 52% 62% 53% 54% 50% 61%

MDD 6/2/19316.30% --6/7/20104.75% --6/7/20114.48%

Since 1963, over all years, the OTC in June has been up 56% of the time with an average gain of 0.5%. During the fourth year of the Presidential Cycle June has been up 64% time with an average gain of 1.6%. 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 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 June over all years since 1963 while the green line shows the average during the fourth 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 fourth year of the Presidential Cycle the SPX has been up 78% of the time with an average gain of 1.4%. 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 fourth year of the Presidential Cycle in green.

Since 1979 the Russell 2000 (R2K) has been up 63% of the time in June with an average gain of 0.6%. During the fourth year of the Presidential Cycle the R2K has been up 60% of the time with an average gain of 1.4%. The best June ever for the R2K, 2000 (+8.6%), the worst 2010 (-7.9%)

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 fourth 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 fourth year of the Presidential Cycle the DJIA has been up 55% 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 fourth year of the Presidential Cycle in green.

Conclusion

Everything is fake. The strongest sector last week was Transportation. Airlines are a big part of all transportation index and they are trying to figure out how to survive.

The strongest sectors last week were Transportation and Banks; the weakest were Biotech and Precious metals.

I expect the major averages to be higher on Friday June 5 than they were on Friday May 29. In the PPT I trust.