The good news is:

• The Nasdaq composite (OTC) & S&P 500 (SPX) closed at their highs for this year again last Friday.

The Negatives

The first 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 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 rose but remains (barely) in negative 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 rose to the neutral level Friday.  

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 moved slightly upward Friday.

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 also turned upward on Friday.

The next chart covers the last 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in brown. 

OTC NH is a long way from confirming the new OTC high.

The next chart is similar to the one above except it shows the SPX in red and NY NH, in green, has been calculated with NYSE data.

NY NH continued falling until Friday.

Summation indices are running totals of oscillator values.

Short term momentum indicators applied to summation indices make them binary so position is most important.

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 on the NYSE.  

NYSE SI’s momentum indicators continued moving downward last week.

The next chart is similar to the one above, except is shows the OTC as the index and the SI’s have been generated from Nasdaq data.  

2 out of 3 of Nasdaq SI’s moved downward until Friday. 

The Positives

Big tech continued to be the major force that is pushing up the OTC and SPX.
 

Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of June during the 3rd 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 2022 while SPX data runs from 1953 to 2022.  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 modestly negative by all measures. 

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

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  -0.21%  -0.30%   0.21%   0.39%  -0.18%  -0.09%

 1967-3  -1.39%  -1.02%   1.26%   0.94%   0.83%   0.61%

 1971-3   0.09%  -0.67%  -0.21%   0.25%   0.13%  -0.41%

 1975-3  -0.90%  -0.73%   0.24%  -0.73%   0.53%  -1.58%

 1979-3   0.14%   0.81%   0.45%   0.70%   0.30%   2.41%


 Avg     -0.45%  -0.38%   0.39%   0.31%   0.32%   0.19%


 1983-3   0.52%  -0.42%  -0.53%   0.08%   0.80%   0.45%

 1987-3   0.38%   0.54%   0.27%   0.13%   0.47%   1.80%

 1991-3  -0.54%   0.16%  -1.12%   0.02%   0.80%  -0.69%

 1995-3   1.13%  -0.39%   0.25%   0.52%  -0.20%   1.31%

 1999-3   2.44%  -1.97%   1.81%  -1.38%  -1.48%  -0.57%


 Avg      0.79%  -0.42%   0.14%  -0.13%   0.08%   0.46%


 2003-3  -1.44%   1.48%   1.13%   0.46%  -1.64%  -0.01%

 2007-3   0.17%  -0.27%  -0.92%  -1.77%   1.27%  -1.53%

 2011-3  -1.11%  -0.04%  -0.97%   0.35%  -1.53%  -3.29%

 2015-3  -0.92%  -0.15%   1.25%   0.11%  -0.62%  -0.33%

 2019-3   1.05%  -0.01%  -0.38%   0.57%  -0.52%   0.71%


 Avg     -0.45%   0.20%   0.02%  -0.05%  -0.61%  -0.89%


OTC summary for PY3 1963 - 2019 

 Avg     -0.04%  -0.20%   0.18%   0.04%  -0.07%  -0.08%

 Win%       53%     27%     60%     80%     53%     40%


OTC summary for all years 1963 - 2022

 Avg     -0.13%  -0.14%   0.04%  -0.07%  -0.02%  -0.31%

 Win%       53%     33%     53%     63%     58%     38%

SPX PY3

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1955-3   0.83%   0.70%   0.67%  -0.54%   0.62%   2.28%

 1959-3  -1.30%  -0.70%   1.47%   0.10%   0.07%  -0.36%


 1963-3  -0.67%   0.13%   0.54%  -0.26%   0.03%  -0.22%

 1967-3  -1.51%   2.04%   0.75%   0.54%   0.18%   1.99%

 1971-3  -0.16%  -0.81%  -0.03%   0.35%   0.43%  -0.22%

 1975-3  -1.37%  -0.84%   0.12%  -0.52%   0.49%  -2.13%

 1979-3   0.15%   1.31%   0.68%   0.48%  -0.29%   2.32%


 Avg     -0.71%   0.36%   0.41%   0.12%   0.16%   0.35%


 1983-3   0.25%  -1.25%  -0.87%   0.29%   0.53%  -1.05%

 1987-3   1.11%   0.19%   0.06%   0.42%   0.97%   2.76%

 1991-3  -0.23%   0.66%  -1.15%   0.26%   1.23%   0.77%

 1995-3   0.58%  -0.01%  -0.45%  -0.15%  -0.83%  -0.86%

 1999-3   0.50%  -1.28%   0.10%  -1.21%  -0.70%  -2.58%


 Avg      0.44%  -0.34%  -0.46%  -0.08%   0.24%  -0.19%


 2003-3  -1.20%   0.91%   1.28%   0.10%  -0.99%   0.11%

 2007-3   0.18%  -0.53%  -0.89%  -1.76%   1.14%  -1.86%

 2011-3  -1.08%  -0.10%  -0.42%   0.74%  -1.40%  -2.25%

 2015-3  -0.65%   0.04%   1.20%   0.17%  -0.70%   0.07%

 2019-3   0.47%  -0.03%  -0.20%   0.41%  -0.16%   0.48%


 Avg     -0.45%   0.06%   0.20%  -0.07%  -0.42%  -0.69%


SPX summary for PY3 1955 - 2019 

 Avg     -0.24%   0.02%   0.17%  -0.03%   0.04%  -0.04%

 Win%       47%     47%     59%     65%     59%     47%


SPX summary for all years 1953 - 2022

 Avg     -0.17%  -0.05%   0.02%  -0.03%   0.10%  -0.13%

 Win%       47%     44%     46%     57%     59%     46%

Conclusion

I have seen several blow-off tops that made me doubt my bearhood. I think what we are watching right now is another one.

The strongest sectors last week were Technology (for the 2nd week) and Internet while the weakest were Utilities and Precious Metals (for the 3rd week in a row).

I expect the major averages to be lower on Friday ,June 9 than they were on Friday, June 2.

Last week's negative forecast was a miss

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