The good news is:

• Breadth strengthened last week.

 

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 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 was pretty much unchanged for the week. 

(Click on image to enlarge)

 

The Positives

The next chart is similar to the first one 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 rose finishing the week in positive territory.  

(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 continued its slow upward movement.

(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 continued moving upward last week.

(Click on image to enlarge)

 

Summation indices are running totals of oscillator values.

Short term momentum indicators 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.  They are all at the top of the chart. 

(Click on image to enlarge)

The next chart is similar to the one above, but it has been generated from NYSE data.  

All the NYSE SI’s momentum indicators are sitting at the top of the chart.  

(Click on image to enlarge)

 

Seasonality

Next week includes the first 5 trading days prior to the 3^rd Friday of April during the 3^rd year of the Presidential Cycle.  The tables below show the daily change, on a percentage basis for that period.  There are going to be errors in these tables.  The program that generates these tables references everything to a count of monthly Fridays and Good Friday moves around from year to year.

OTC data covers the period from 1963 to 2021 while SPX data runs from 1953 to 2021.  There are summaries for both the 3^rd 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 positive and stronger during the 3^rd 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 3rd Friday.

 

OTC Presidential Year 3 (PY3)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1963-3   0.56%   0.31%   0.34%   0.30%   0.30%   1.81%

 1967-3   0.40%   0.57%   1.23%   0.31%   0.49%   3.01%

 1971-3   0.18%  -0.57%  -0.01%   0.43%   0.64%   0.67%

 1975-3   1.34%   0.23%   0.63%   0.33%  -0.23%   2.30%

 1979-3   0.15%   0.31%   0.36%  -0.10%  -0.20%   0.52%

 

 Avg      0.53%   0.17%   0.51%   0.25%   0.20%   1.66%

 

 1983-3   0.44%  -0.34%   1.05%   0.71%   0.60%   2.45%

 1987-3  -0.41%   0.20%  -0.10%  -0.17%  -1.15%  -1.64%

 1991-3  -0.16%   1.18%   0.90%  -0.92%  -1.07%  -0.06%

 1995-3   0.66%   0.29%   0.68%   0.48%   0.36%   2.47%

 1999-3  -5.57%   2.73%   3.26%   2.92%   1.16%   4.50%

 

 Avg     -1.01%   0.81%   1.16%   0.61%  -0.02%   1.54%

 

 2003-3  -0.08%   1.89%   1.02%  -0.61%  -1.56%   0.67%

 2007-3  -0.11%   0.03%   0.92%   0.26%   0.11%   1.22%

 2011-3  -0.32%  -0.96%   0.61%  -0.05%   0.16%  -0.56%

 2015-3   1.27%   0.39%   0.42%   0.41%   0.71%   3.21%

 2019-3   0.22%   1.32%  -0.23%   0.21%   0.34%   1.85%

 

 Avg      0.20%   0.53%   0.55%   0.04%  -0.05%   1.28%

 

OTC summary for PY3 1963 - 2019 

 Avg     -0.10%   0.51%   0.74%   0.30%   0.04%   1.49%

 Win%       60%     80%     80%     67%     67%     80%

 

OTC summary for all years 1963 - 2022

 Avg     -0.35%   0.31%   0.29%   0.18%   0.13%   0.56%

 Win%       46%     59%     68%     60%     62%     67%

 

SPX PY3

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1955-3   0.82%  -0.13%   0.16%   0.10%  -0.81%   0.14%

 1959-3   0.37%   0.50%   0.44%   0.83%   0.85%   2.99%

 

 1963-3   0.10%   0.33%   0.27%   0.06%  -0.09%   0.68%

 1967-3   0.71%   0.87%   0.09%   0.18%   0.21%   2.05%

 1971-3   0.50%  -0.38%  -0.24%   0.19%   0.47%   0.54%

 1975-3   1.69%   0.82%   0.35%   0.75%  -1.09%   2.51%

 1979-3   0.34%   0.62%   0.29%  -0.48%  -0.21%   0.57%

 

 Avg      0.67%   0.45%   0.15%   0.14%  -0.14%   1.27%

 

 1983-3   0.62%  -0.64%   1.26%  -0.41%   0.23%   1.06%

 1987-3  -0.29%   2.44%  -2.01%  -0.13%  -1.85%  -1.83%

 1991-3   0.21%   1.69%   0.73%  -0.51%  -1.10%   1.02%

 1995-3   0.87%  -0.14%   0.10%   0.17%   0.23%   1.22%

 1999-3  -2.24%   1.30%   2.29%   1.70%  -0.14%   2.91%

 

 Avg     -0.17%   0.93%   0.47%   0.16%  -0.53%   0.88%

 

 2003-3  -0.18%   2.17%   0.84%  -0.83%  -1.38%   0.62%

 2007-3  -0.23%  -0.04%   1.01%  -0.08%  -0.01%   0.66%

 2011-3  -0.28%  -0.78%   0.02%   0.01%   0.39%  -0.64%

 2015-3   0.92%  -0.15%   0.51%   0.24%   0.23%   1.75%

 2019-3   0.10%   0.88%  -0.22%  -0.04%   0.47%   1.20%

 

 Avg      0.07%   0.42%   0.43%  -0.14%  -0.06%   0.72%

 

 SPX summary for PY3 1955 - 2019

 Avg      0.24%   0.55%   0.35%   0.10%  -0.21%   1.03%

 Win%       71%     59%     82%     59%     47%     88%

 

SPX summary for all years 1953 - 2022

 Avg     -0.14%   0.29%   0.12%   0.06%  -0.04%   0.29%

 Win%       47%     56%     58%     60%     50%     64%

 

Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms.

The first chart, made with FastTrack, covers the past 5 years showing the SPX in red and M2 money supply in green.

Money supply has been declining slowely since late 2021.

 

Treasury rates at their close last Friday and their changes from last month:

2yr yield 4.110% up from 3.825%

5yr yield 3.611% up from 3.510%

10yr yield 3.520% up from 3.430% 

30yr yield 3.740% up from 3.628%

Everything is inverted (shorter term maturities yield more than longer term maturities) except the 30 year to the 10 year and 5 year (same as last month).

 

The next chart covers the past 15 months showing the 30 year yield over the 5 year yield on top, The 1, 2, 5, 10 & 30 year treasury rates in the middle group and the SPX with a 50 day simple moving average on the bottom.

 

Conclusion

Prices and breadth both strengthened last week.

 

The strongest sectors last week were Precious metals (for the 5^th week) and Energy while the weakest were Electronics (for the 2^nd week) and Banks (for the 3^rd week).

 

I expect the major averages to be higher on Friday April 21 than they were on Friday April 14.

 

Good luck 

Mike Burk 

YTD W 4/ L 6/ T 5

 

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