The good news is:

• New lows on the NYSE remained at non threatening levels last week.  

The Negatives

The market had a mixed week last week. The blue chips held up pretty well while the secondaries took it on the chin.

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 fell further into negative territory last week. 

Summation indices are running totals of oscillator values. The next chart shows summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume. Direction is all that matters.

The chart covers the past 6 months showing summation indices generated from Nasdaq data.  In the past week they all turned downward.

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 fell sharply finishing the week barely in positive territory.  

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 turned down a little early in the week then moved up a little on Thursday.

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 as prices fell last week.

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

All the NYSE SI’s continued moving upward last week

Seasonality

Next week includes the first 5 trading days prior to the 2nd Friday of April during the 3rd 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 for the rest of April.  The program that generates these tables references everything to a count of 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 3rd 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 modest and mixed.. 

Report for the week before the 2nd Friday of April. The number following the year is the position in the Presidential Cycle.

Daily returns from Monday to 2nd Friday.

OTC Presidential Year 3 (PY3)

Year       Mon     Tue     Wed    Thur    Fri    Totals

1963-3   0.43%  -0.34%   0.03%  -0.28%   0.25%   0.09%

1967-3  -0.74%  -1.20%   0.29%   0.57%   0.30%  -0.78%

1971-3   0.45%  -0.02%   0.21%   0.56%   0.25%   1.45%

1975-3  -0.52%   0.26%   1.17%   0.48%   0.73%   2.10%

1979-3  -0.79%  -0.17%   0.49%   0.20%   0.37%   0.10%

Avg     -0.23%  -0.29%   0.44%   0.31%   0.38%   0.59%

1983-3   1.01%   0.71%   1.17%   1.04%   1.00%   4.94%

1987-3   0.10%  -0.86%   0.21%  -0.67%  -0.25%  -1.47%

1991-3  -0.03%  -0.64%  -0.35%   1.74%   0.46%   1.19%

1995-3  -0.22%  -0.61%  -1.11%   0.30%   0.54%  -1.10%

1999-3   0.22%  -0.59%  -2.95%   0.59%  -1.51%  -4.24%

Avg      0.22%  -0.40%  -0.61%   0.60%   0.05%  -0.14%

2003-3   0.43%  -0.47%  -1.89%   0.65%  -0.50%  -1.77%

2007-3   1.06%  -0.05%  -0.26%  -0.21%   0.84%   1.38%

2011-3  -0.01%   0.07%   0.31%  -0.13%  -0.56%  -0.33%

2015-3  -0.15%  -0.22%   0.68%  -0.06%  -1.52%  -1.28%

2019-3   0.19%  -0.56%   0.69%  -0.21%   0.46%   0.58%

Avg      0.30%  -0.25%  -0.09%   0.01%  -0.25%  -0.28%

OTC summary for PY3 1963 - 2019 

Avg      0.09%  -0.31%  -0.09%   0.30%   0.06%   0.06%

Win%       53%     20%     67%     60%     67%     53%

OTC summary for all years 1963 - 2022

Avg      0.04%   0.03%  -0.05%   0.17%  -0.27%  -0.07%

Win%       60%     53%     55%     57%     52%     60%

SPX PY3

Year       Mon     Tue     Wed    Thur    Fri    Totals

1955-3   0.27%   0.59%   0.13%   0.21%   0.45%   1.65%

1959-3   0.28%  -0.21%  -0.48%  -0.07%   0.09%  -0.39%

1963-3   0.47%   0.07%  -0.32%  -0.04%   0.49%   0.67%

1967-3  -1.25%   0.73%  -0.11%   0.77%   1.08%   1.21%

1971-3   0.76%   0.10%   0.38%   0.15%  -0.03%   1.36%

1975-3  -0.66%   0.80%   2.28%   1.12%   0.49%   4.04%

1979-3  -0.86%   0.12%   0.45%  -0.41%  -0.05%  -0.75%

Avg     -0.31%   0.36%   0.54%   0.32%   0.40%   1.30%

1983-3   1.50%   0.44%   0.61%   0.85%   0.40%   3.81%

1987-3   0.51%  -1.74%   0.19%  -1.48%  -0.13%  -2.64%

1991-3   0.88%  -1.35%  -0.11%   1.20%   0.73%   1.36%

1995-3  -0.61%  -0.15%  -0.09%   0.07%   0.63%  -0.14%

1999-3   0.76%  -0.65%  -1.58%  -0.42%  -0.29%  -2.19%

Avg      0.61%  -0.69%  -0.20%   0.05%   0.27%   0.04%

2003-3   0.12%  -0.19%  -1.40%   0.65%  -0.38%  -1.19%

2007-3   1.08%   0.20%   0.07%  -0.12%   0.93%   2.16%

2011-3   0.03%  -0.02%   0.22%  -0.15%  -0.40%  -0.32%

2015-3  -0.46%   0.16%   0.51%  -0.08%  -1.13%  -0.99%

2019-3   0.10%  -0.61%   0.35%   0.00%   0.66%   0.51%

Avg      0.18%  -0.09%  -0.05%   0.06%  -0.06%   0.03%

SPX summary for PY3 1955 - 2022 

Avg      0.17%  -0.10%   0.07%   0.13%   0.21%   0.48%

Win%       71%     53%     59%     53%     59%     53%

SPX summary for all years 1953 - 2022

Avg      0.13%   0.12%   0.03%   0.01%  -0.06%   0.23%

Win%       59%     56%     54%     56%     51%     57%

Conclusion

The market eliminated its overbought condition last week.

Unfortunately the secondaries seriously underperformed the blue chips.

The strongest sectors last week were Precious Metals (for the 4th week) and Utilities while the weakest were Electronics and Banks (for the 2nd week).

I expect the major averages to be higher on Friday, April 14 than they were on Friday, April 7.

Last week the Dow Industrial Average was up while the other major indices were down so I am calling last week's positive forecast a tie.

More By This Author: