The good news is:

• The S&P 500 (SPX) closed at an all time high last Monday and the Dow Jones Industrial average closed at an all time high on Friday.

The Negatives

Negatives are difficult to find.

The Positives

The first chart covers the last 6 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 on the 1^st trading day of each month.  

OTC NH tumbled last week. 

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.  

NY NH declined failing to confirm the index all time high on Monday.

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 was pretty flat for another week.

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 moving upward.

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 positive territory.

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 declined slightly, but, closed the week at a very strong 89%. 

Seasonality

Next week includes the 5 trading days prior to the 2^nd Friday of October 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 mixed and weaker during the 4^th year of the Presidential Cycle than other years, There were huge losses during this week in 2008 which lowers the average return considerably. 

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

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 WedThurFriTotals

 1964-4 0.07% 0.19% 0.30% 0.35% 1.04% 1.94%

 1968-4-0.12%-0.53% 0.00% 0.42%-0.35%-0.58%

 1972-4 0.30% 0.40%-0.35%-0.54%-0.53%-0.73%

 1976-4 0.02%-0.78%-0.80% 0.67%-0.28%-1.17%

 1980-4 1.33% 0.08% 0.51% 0.18% 0.13% 2.24%

 Avg0.32%-0.13%-0.08% 0.21% 0.00% 0.34%

 1984-4-0.37%-0.20%-0.32% 0.59% 0.56% 0.27%

 1988-4-0.05%-0.05%-0.71% 0.24% 0.29%-0.28%

 1992-4-1.12% 0.94%-0.24% 0.82%-0.59%-0.18%

 1996-4 0.26%-0.86%-0.18%-0.08% 0.91% 0.06%

 2000-4-0.16%-3.43%-2.22%-2.96% 7.87%-0.90%

 Avg -0.29%-0.72%-0.73%-0.28% 1.81%-0.20%

 2004-4 0.53% 0.16% 0.79%-1.14%-1.47%-1.13%

 2008-4-4.34%-5.80%-0.83%-5.47% 0.27% -16.17%

 2012-4-0.76%-1.52%-0.43%-0.08%-0.17%-2.96%

 2016-4 0.69%-1.54%-0.15%-0.49% 0.02%-1.47%

 2020-4 2.32%-1.57% 1.88% 0.50% 1.39% 4.53%

 Avg -0.31%-2.05% 0.25%-1.34% 0.01%-3.44%

OTC summary for PY4 1964 - 2020 

 Avg -0.09%-0.97%-0.19%-0.47% 0.61%-1.10%

 Win% 53% 33% 29% 53% 60% 33%

OTC summary for all years 1963 - 2023

 Avg -0.04%-0.37%-0.05% 0.21% 0.44% 0.19%

 Win% 56% 46% 52% 67% 69% 56%

SPX PY4

 Year Mon Tue WedThurFriTotals

 1956-4-0.04%-0.50% 1.39%-0.06% 0.41% 1.19%

 1960-4 0.20% 0.15%-0.13% 0.78% 0.53% 1.53%

 1964-4 0.45% 0.06% 0.01% 0.28% 0.21% 1.02%

 1968-4-0.01% 0.04% 0.00%-0.43%-0.11%-0.51%

 1972-4 0.26% 0.08%-0.45%-0.82%-0.63%-1.56%

 1976-4-0.13%-0.77%-0.25% 0.55%-0.95%-1.55%

 1980-4 1.86%-0.55% 0.50%-0.46%-0.57% 0.76%

 Avg0.48%-0.23%-0.05%-0.18%-0.41%-0.37%

 1984-4-0.34%-0.28% 0.27% 0.41% 0.86% 0.92%

 1988-4 0.06%-0.11%-1.42% 0.45% 0.10%-0.92%

 1992-4-0.71%-0.10%-0.72% 0.87%-1.25%-1.90%

 1996-4 0.27%-0.39%-0.56%-0.31% 0.87%-0.11%

 2000-4-0.49%-1.07%-1.62%-2.55% 3.34%-2.39%

 Avg -0.24%-0.39%-0.81%-0.23% 0.78%-0.88%

 2004-4 0.32%-0.06% 0.67%-1.00%-0.75%-0.82%

 2008-4-3.85%-5.74%-1.13%-7.62%-1.18% -19.52%

 2012-4-0.35%-0.99%-0.62% 0.02%-0.30%-2.23%

 2016-4 0.46%-1.24% 0.11%-0.31% 0.02%-0.96%

 2020-4 1.80%-1.40% 1.74% 0.80% 0.88% 3.82%

 Avg -0.32%-1.89% 0.15%-1.62%-0.27%-3.94%

SPX summary for PY4 1956 - 2020 

 Avg -0.01%-0.76%-0.14%-0.55% 0.09%-1.37%

 Win% 53% 24% 44% 47% 53% 35%

SPX summary for all years 1953 - 2023

 Avg0.10%-0.28% 0.13%-0.04% 0.15% 0.05%

 Win% 53% 36% 51% 45% 56% 58%

Conclusion

New highs declined a bit last week, but remained at comfortably strong levels.

New lows are at insignificant levels on the NYSE, but a little high on the Nasdaq.

Seasonality for the coming week has been mixed and distorted by big losses in 2008.

The strongest sectors last week were Energy (up from the bottom last week) and Technology while the weakest were Health Care (for the 3^rd week) and Precious Metals (down from the top last week.

I expect the major averages to be higher on Friday October 11 than they were on Friday October 4. 

Last week the Russell 2000 was down and the DJIA, OTC and SPX were up.So I am calling last weeks positive forecast a tie.

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