The good news is the S&P 500 (SPX) closed at an all time high last Friday and new lows remain insignificant. 

The Negatives

New highs are much lower than they were at the index highs a few weeks ago, but they are still at comfortably high levels.

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

There is a slight improvement here, but clearly a non confirmation.

The next chart is similar to the first one except it shows the NASDAQ composite (OTC) in blue and OTC NH, in green, has been calculated with NASDAQ data.

OTC NH is NOT confirming the rally.

New highs will need to recover if this rally is to be significantly extended.

The Positives

The strongest indication the recent pull back is over is the rapid decline in the number of new lows.

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue.  NY NL has been plotted on an inverted Y axis so DECREASING numbers of new lows move the indicator upward (up is good).

NY NL continued to move upward; risk is limited.

The next chart is similar to the previous one except it shows the OTC in blue and OTC NL, in brown, has been calculated with NASDAQ data.

Ditto the previous chart.

The next chart covers the past 6 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 rose to a very strong 95%.

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.

OTC HL Ratio finished the week at a comfortable 82%.

Seasonality

Next week includes the five trading days prior to the third Friday of April during the first year of the Presidential Cycle.  The tables below show the daily change, on a percentage basis, for that period.  The program counts Fridays and with Good Friday usually falling in April various years are often off by a week.

OTC data covers the period from 1963 to 2020 while SPX data runs from 1928 to 2020.  There are summaries for both the first year of the Presidential Cycle and all years combined. 

Average returns for the coming week have been mixed, but weaker during the first year of the Presidential Cycle than other years.

Report for the week before the 3rd Friday of April

The number following the year is the position in the Presidential Cycle.

Daily returns from Monday through third Friday.

OtC Presidential Year 1 (PY1)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1965-1   0.30%   0.16%   0.12%  -0.06%   0.28%   0.79%

 1969-1   0.55%  -0.89%   0.08%   0.50%  -0.19%   0.06%

 1973-1  -0.99%  -1.58%  -1.67%   0.32%  -1.20%  -5.13%

 1977-1  -0.09%  -0.07%   0.27%  -0.56%  -0.73%  -1.19%

 

 1981-1   0.42%  -0.38%   0.35%   0.24%   0.71%   1.34%

 1985-1  -0.35%   0.00%   0.44%   0.32%   0.06%   0.47%

 1989-1   0.02%   0.71%   0.28%  -0.09%   0.53%   1.45%

 1993-1  -0.56%  -0.16%   0.31%  -0.08%  -0.77%  -1.26%

 1997-1   0.79%  -0.29%  -0.21%   0.56%   0.45%   1.30%

 

 Avg      0.06%  -0.03%   0.24%   0.19%   0.20%   0.66%

 

 2001-1  -4.81%  -2.07%   2.14%  -1.21%   2.01%  -3.95%

 2005-1  -0.36%   0.67%  -1.55%  -1.40%  -1.98%  -4.62%

 2009-1  -3.88%   2.22%   0.14%   0.37%   2.55%   1.39%

 2013-1  -2.38%   1.50%  -1.84%  -1.20%   1.25%  -2.66%

 2017-1   1.24%   0.70%   0.00%   0.39%  -0.02%   2.30%

Avg     -2.04%   0.60%  -0.22%  -0.61%   0.76%  -1.51%

OTC summary for PY1 1965 - 2017 

 Avg     -0.72%   0.04%  -0.08%  -0.14%   0.21%  -0.69%

 Win%       43%     46%     64%     50%     57%     57%

OTC summary for all years 1963 - 2020

 Avg     -0.34%   0.30%   0.30%   0.23%   0.15%   0.64%

 Win%       47%     60%     69%     62%     62%     69%

SPX PY1

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1953-1   0.45%  -0.24%  -0.85%  -1.10%   0.04%  -1.71%

 1957-1   0.15%   0.37%   0.15%  -0.35%  -0.13%   0.20%

 1961-1   0.47%  -0.72%  -0.59%   0.02%  -0.08%  -0.90%

 1965-1   0.41%  -0.06%  -0.18%   0.54%   0.11%   0.83%

 1969-1  -0.67%   0.22%   0.02%   0.47%   0.44%   0.48%

 1973-1  -0.53%  -1.42%  -1.50%   0.51%  -1.52%  -4.47%

 1977-1  -0.49%  -0.47%   0.33%  -0.65%  -1.31%  -2.59%

 Avg     -0.17%  -0.49%  -0.38%   0.18%  -0.47%  -1.33%

 

 1981-1   0.56%  -0.90%  -0.07%  -0.15%   0.90%   0.34%

 1985-1  -0.23%   0.65%   0.21%   0.64%  -0.68%   0.60%

 1989-1   0.12%   1.43%   0.37%  -0.31%   1.12%   2.72%

 1993-1  -0.33%  -0.53%  -0.33%  -0.94%  -0.55%  -2.68%

 1997-1   0.82%   1.48%   1.17%  -0.23%   0.60%   3.84%

 Avg      0.19%   0.43%   0.27%  -0.20%   0.28%   0.96%

 

 2001-1  -1.50%  -1.22%   1.59%   0.47%   1.50%   0.85%

 2005-1   0.00%   0.55%  -1.18%  -1.00%  -1.67%  -3.29%

 2009-1  -4.28%   2.13%  -0.77%   0.99%   1.68%  -0.25%

 2013-1  -2.30%   1.43%  -1.43%  -0.67%   0.88%  -2.08%

 2017-1   1.08%   0.61%  -0.05%   0.06%  -0.19%   1.51%

Avg     -1.40%   0.70%  -0.37%  -0.03%   0.44%  -0.65%

SPX summary for PY1 1953 - 2017 

 Avg     -0.37%   0.20%  -0.18%  -0.10%   0.07%  -0.39%

 Win%       53%     53%     41%     47%     53%     53%

SPX summary for all years 1953 - 2020

 Avg     -0.14%   0.28%   0.12%   0.10%  -0.01%   0.34%

 Win%       49%     56%     58%     62%     50%     66%

Conclusion

This report is similar to last week's report.  New lows remained at comfortably low levels.  New highs increased a little, but did not confirm the new SPX all time high and the secondaries lagged behind the blue chips.  

The strongest sectors last week were Precious metals (up from the bottom the week before) and Technology while the weakest were Biotech and Energy.

I expect the major averages to be higher on Friday, April 16, than they were on Thursday, April 9. 

Last week the Russell 2000 was down a little while all the other major indices were up.  So, I am calling last weeks positive forecast a tie.