The good news is:

• The blue chip indices had a good week.

The Negatives

There was a story in the WSJ last week about how profits were down at Black Rock, the world’s largest money manager. In essence the story said their customers were not interested in trading any part of this market, i.e. stocks or bonds.  

Yet we are looking at record buying on the exchanges.

The first chart covers the past 6 months showing the NASDAQ composite (OTC) in blue and a 5% trend (39 day EMA) of volume of advancing issues (OTC UV 5%) in green. Dashed vertical lines have been drawn of the 1st trading day of each month.

This chart shows record buying volume. Who is doing it?

The next chart is similar to the one above except it covers the past 10 years and the dashed vertical lines have been drawn on the first trading day of each year.

We are looking at record buying from, according to Black Rock, uninterested investors.

The next chart is similar to the 1st one except it shows the S&P 500 (SPX) in red and NY UV 5% has been calculated with NYSE data.

The next chart is similar to the 2nd one, covering 10 yrs. except it shows the SPX in red and NY UV 5% in green

It is interesting that banks and financial service companies are suffering during this period of record buying.

The Positives

New lows have dropped to insignificant levels.

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 spent the week dancing around the neutral line finishing the week at 54% the same level it was at a week ago.

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 went positive Friday finishing the week at a modestly positive 58%.

Seasonality

Next week includes the 5 trading days prior to the 4th Friday of April during the 4th year of the Presidential Cycle. The tables below show the daily change, on a percentage basis, for that period.Good Friday usually occurs in April so the market does not have may 4th Friday’s in April.There are a lot of 0’ in the table.

OTC data covers the period from 1963 to 2019 while SPX data runs from 1953 to 2019.There are summaries for both the 4th 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.

The limited data shows a modestly negative week.Seasonality is not relevant at this time.

Report for the week before the 4th Friday of April.

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

Daily returns from Monday through the 4th Friday.

OTC Presidential Year 4 (PY4)

 Year Mon Tue Wed Thur Fri Totals

 1964-4 0.54% 0.38% 0.08% 0.00% -0.20% 0.79%

 1968-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1972-4-0.83% -0.80% 0.06% 0.07% 0.24%-1.26%

 1976-4-0.03% -0.65% 0.36% 0.28% -0.52%-0.57%

 1980-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1984-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1988-4 0.33% 0.68% 0.22% 0.03% 0.12% 1.38%

 1992-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1996-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 Avg0.33% 0.68% 0.22% 0.03% 0.12% 1.38%

 2000-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 2004-4-0.63% -0.21%-2.12% -1.55% -1.97%-6.48%

 2008-4 0.21% -1.29% 1.19% 0.99% -0.25% 0.85%

 2012-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 2016-4 0.44% -0.40% 0.16% -0.05% -0.80%-0.64%

 Avg0.01% -0.63%-0.26% -0.20% -1.01%-2.09%

OTC summary for PY4 1964 - 2016 

 Avg0.00% -0.33%-0.01% -0.04% -0.48%-0.85%

 Win% 57% 29% 86% 67% 29% 43%

OTC summary for all years 1963 - 2019

 Avg -0.06% -0.15% 0.00% 0.15% -0.33%-0.40%

 Win% 57% 47% 72% 66% 50% 60%

SPX PY4

Year Mon Tue Wed Thur Fri Totals

 1956-4-0.23% -0.82%-0.36% 0.85% 1.05% 0.49%

 1960-4-1.01% 0.33% 0.00% -0.87% -0.35%-1.90%

 1964-4-0.06% 0.05%-0.06% -0.14% -0.78%-0.99%

 1968-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1972-4-0.64% -0.99%-0.21% 0.15% 0.58%-1.12%

 1976-4 0.14% -0.56% 0.27% 0.00% -0.48%-0.63%

 Avg -0.39% -0.29% 0.00% -0.29% -0.26%-1.16%

 1980-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1984-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1988-4 0.89% 0.56%-0.05% -0.45% -0.49% 0.46%

 1992-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1996-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 Avg0.89% 0.56%-0.05% -0.45% -0.49% 0.46%

 2000-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 2004-4-0.44% 0.23%-1.38% -0.76% -0.59%-2.95%

 2008-4-0.16% -0.88% 0.29% 0.64% 0.65% 0.55%

 2012-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 2016-4 0.65% 0.31% 0.08% -0.52% 0.00% 0.52%

 Avg0.02% -0.12%-0.34% -0.21% 0.02% -0.63%

SPX summary for PY4 1956 - 2015 

 Avg -0.10% -0.20%-0.18% -0.14% -0.04%-0.62%

 Win% 33% 56% 38% 38% 44% 44%

SPX summary for all years 1953 - 2019

 Avg -0.03% 0.00%-0.18% 0.01% -0.02%-0.21%

 Win% 51% 53% 42% 43% 56% 50%

Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms.

M2 hit a growth rate NEVER seen before. This is why the market has been up.

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

2yr yield 0.375% down from 0.506%

5yr yield 0.500% down from 0.718%

10yr yield 1.500% up from 0.981%

30yr yield 2.000% up from 1.548%

The PPT is being careful not to let the yield get inverted.

The next chart is a close up showing just the past year from the chart above.

Conclusion

It looks like the Plunge Protection Team (PPT) AKA the working group on financial markets has been busy.

The strongest sectors last week were Health and Electronics; the weakest were Banks, Finance and, of course Energy.

I expect the major averages to be higher on Friday April 24 than they were on Thursday April 17.In the PPT I trust.

Last week the blue chip averages were up while the, usually ignored by the PPT, Russell 2000 was down. So I am calling last weeks positive forecast a tie.