The good news is new lows have remained minimal.

The Negatives

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 on the first trading day of each month.

There was a short-term non-confirmation at the beginning of the month; since then, new highs have continued to decline.

Just in case you thought the chart above did not look too bad, the next chart is similar to the one above, except it covers the past nine months. Here you can see short and longer term non-confirmations.

The next chart is similar to the first one, except it shows the S&P 500 (SPX) in red and the NY NH in green. The information has been calculated with NYSE data.

This chart is only slightly different from the first chart. The non-confirmation early in the month is more clearly defined, while the decline was arrested last week.

This chart like the second one which covers the past nine months. The deterioration is obvious.

The Positives

New lows remained insignificant. The next chart covers the past six months, showing the SPX in red and a 40% trend (four-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 solidly at the 50% neutral level.

The NY HL Ratio jumped up to a strong 80% last Friday, and the data was positive every day last week.

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

The OTC HL Ratio also rose, finishing the week at a comfortable 75%. 

Seasonality

Next week includes the five trading days prior to the fourth Friday of September 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 the SPX data runs from 1953 to 2019. There are summaries for both the fourth year of the Presidential Cycle, and all years combined. Prior to 1953, the market traded six days a week, so that data has been ignored.

Returns for the coming week have been negative by all measures. The number following the year is the position in the Presidential Cycle. Daily returns from Monday through the fourth Friday:

OTC Presidential Year 4 (PY4)

•  Year        Mon      Tue     Wed       Thur       Fri    Totals
•  1964-4   0.28%   0.52%   0.33%   0.21%   0.56%   1.90%
•  1968-4   0.03%   0.14%   0.00%  -0.09%  -0.08%   0.00%
•  1972-4  -0.05%  -0.15%   0.07%  -0.16%   0.13%  -0.16%
•  1976-4   0.31%   0.58%   0.02%  -0.18%   0.04%   0.76%
•  1980-4   0.31%  -0.45%   0.07%  -0.58%  -1.69%  -2.34%
•  1984-4  -0.74%  -0.31%   0.09%   0.02%  -0.14%  -1.09%
•  1988-4  -0.12%   0.17%   0.21%  -0.01%   0.03%   0.28%
•  1992-4  -0.09%  -0.95%  -0.01%   0.51%  -1.49%  -2.03%
•  1996-4  -0.67%   0.31%   0.77%   0.27%   0.17%   0.86%
•  Avg     -0.26%  -0.25%   0.23%   0.04%  -0.62%  -0.87%
•  2000-4  -2.83%   3.73%   0.82%  -1.76%  -0.66%  -0.69%
•  2004-4  -0.11%   0.69%  -1.85%   0.04%  -0.37%  -1.60%
•  2008-4  -4.17%  -1.18%   0.11%   1.43%  -0.15%  -3.96%
•  2012-4  -0.60%  -1.36%  -0.77%   1.39%  -0.65%  -2.00%
•  2016-4  -0.18%   0.12%   1.03%   0.84%  -0.63%   1.17%
•  Avg     -1.58%   0.40%  -0.13%   0.39%  -0.49%  -1.41%

OTC summary for PY4 1964 - 2016 

•  Avg     -0.62%   0.13%   0.07%   0.14%  -0.35%  -0.64%
•  Win%       29%     57%     77%     57%     36%     43%

OTC summary for all years 1963 - 2019

•  Avg     -0.26%  -0.11%   0.08%  -0.33%  -0.15%  -0.78%
•  Win%       40%     51%     54%     38%     47%     42%

SPX PY4

•     Year      Mon     Tue       Wed       Thur       Fri      Totals
•  1956-4  -0.39%  -1.40%   0.15%  -0.48%  -0.55%  -2.66%
•  1960-4  -2.27%   0.28%   1.04%  -0.38%  -0.85%  -2.18%
•  1964-4   0.46%   0.04%   0.02%   0.11%   0.25%   0.87%
•  1968-4   0.57%   0.34%   0.00%  -0.22%  -0.05%   0.64%
•  1972-4  -0.18%  -0.06%   0.05%  -0.16%   0.08%  -0.27%
•  1976-4   0.05%   1.42%  -0.34%  -0.50%  -0.11%   0.51%
•  Avg     -0.28%   0.40%   0.19%  -0.23%  -0.13%  -0.09%
•  1980-4   0.89%  -0.74%   0.73%  -1.27%  -1.84%  -2.23%
•  1984-4  -0.24%   0.21%   0.40%   0.41%  -0.52%   0.26%
•  1988-4  -0.68%   0.34%   0.16%  -0.36%   0.22%  -0.33%
•  1992-4  -0.19%  -1.18%   0.07%   0.25%  -0.98%  -2.04%
•  1996-4  -0.08%  -0.13%   0.03%   0.01%   0.05%  -0.12%
•  Avg     -0.06%  -0.30%   0.28%  -0.19%  -0.62%  -0.89%
•  2000-4  -1.45%   1.07%  -0.59%  -0.16%  -0.02%  -1.15%
•  2004-4  -0.56%   0.63%  -1.39%  -0.47%   0.16%  -1.63%
•  2008-4  -3.82%  -1.56%  -0.20%   1.97%   0.32%  -3.30%
•  2012-4  -0.22%  -1.05%  -0.57%   0.96%  -0.45%  -1.33%
•  2016-4   0.00%   0.03%   1.09%   0.65%  -0.57%   1.20%
•  Avg     -1.21%  -0.18%  -0.33%   0.59%  -0.11%  -1.24%

SPX summary for PY4 1956 - 2016 

•  Avg     -0.51%  -0.11%   0.04%   0.02%  -0.30%  -0.86%
•  Win%       25%     56%     67%     44%     38%     31%

SPX summary for all years 1953 - 2019

•  Avg     -0.40%  -0.06%  -0.03%  -0.22%  -0.14%  -0.85%
•  Win%       31%     45%     52%     39%     40%     35%

Conclusion

The market had a good week going until Friday, September 18. Estimated seasonality for next week is awful. The strongest sectors last week were basic materials and health care. The weakest sectors were utilities and banks. 

I expect the major averages to be lower on Friday, September 25 than they were on Friday, September 18. Last week, the Russell 2000 was up while everything else was down; thus, I am calling last week's positive forecast a tie.