The good news is:

• The market had a good week and the secondaries led the way up.

 

The Negatives

The first chart covers the last 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green.  Dashed vertical lines have been drawn on the 1^st trading day of each month.  

NY NH is rising, but, there are not many new highs for an index that is only 2.3% off its all time high..

 

The next chart is similar to the 1^st one except it shows the Nasdaq composite (OTC) in blue and OTC NH in green has been calculated with Nasdaq data.  

OTC NH is weak for an index only 3.2% off its all time high.

The lack of new highs implies narrow leadership.

 

The Positives

The next 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 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 to a comfortable 76%. 

 

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 HLR finished the week at a strong 82%. 

 

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue.  NY NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good).  

NY NL continued its move upward; no problems here.

 

The next chart is similar to the one above except it shows the OTC in blue and OTC NL, in brown, has been calculated with Nasdaq data.

OTC NL has continued to move upward.

Seasonality

Next week includes the 5 trading days prior to the 2^nd Friday of June during the 1^st 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 2024 while SPX data runs from 1953 to 2024.  There are summaries for both the 1^st 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.

Seasonality for next week has been modest and mixed.

 

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 1 (PY1)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1965-1   0.14%  -0.55%  -1.55%  -1.45%  -0.55%  -3.95%

 1969-1  -0.85%  -0.83%  -0.53%  -0.89%  -1.79%  -4.89%

 1973-1  -1.50%   0.93%  -0.01%   0.86%   1.12%   1.40%

 1977-1  -0.08%   0.06%   0.44%   0.04%   0.46%   0.91%

 1981-1  -0.21%  -0.38%   0.18%   0.88%   0.19%   0.66%

 

 Avg     -0.50%  -0.15%  -0.30%  -0.11%  -0.11%  -1.17%

 

 1985-1  -0.11%  -0.06%  -0.30%  -0.94%   0.36%  -1.06%

 1989-1  -0.84%   0.03%   0.95%   0.40%  -0.07%   0.46%

 1993-1  -1.05%  -0.99%   0.22%  -0.17%   0.75%  -1.25%

 1997-1   0.51%  -0.73%   0.44%   0.24%   0.83%   1.30%

 2001-1   0.30%   3.61%  -0.72%   2.09%  -2.16%   3.12%

 

 Avg     -0.24%   0.37%   0.12%   0.32%  -0.06%   0.51%

 

 2005-1   0.21%  -0.41%  -0.34%   0.81%  -0.67%  -0.40%

 2009-1  -0.38%   0.96%  -0.38%   0.50%  -0.19%   0.51%

 2013-1   0.13%  -1.06%  -1.06%   1.32%  -0.63%  -1.30%

 2017-1  -0.16%  -0.33%   0.36%   0.39%  -1.80%  -1.55%

 2021-1   0.49%   0.31%  -0.09%   0.78%   0.35%   1.83%

 

 Avg      0.06%  -0.11%  -0.30%   0.76%  -0.59%  -0.18%

 

OTC summary for PY1 1965 - 2021 

 Avg     -0.23%   0.04%  -0.16%   0.32%  -0.25%  -0.28%

 Win%       40%     40%     40%     73%     47%     53%

 

OTC summary for all years 1963 - 2024

 Avg     -0.12%  -0.11%   0.04%  -0.04%  -0.01%  -0.25%

 Win%       53%     35%     52%     64%     60%     40%

 

SPX PY1

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1953-1  -0.33%  -1.71%  -0.25%   0.89%   0.29%  -1.11%

 1957-1  -0.52%   1.14%   0.23%   0.19%   0.02%   1.05%

 1961-1   0.52%  -0.28%  -0.37%   0.05%  -0.01%  -0.10%

 

 1965-1  -0.26%  -1.09%  -1.04%  -0.36%   0.46%  -2.30%

 1969-1  -0.90%  -0.77%  -0.87%  -1.30%   0.40%  -3.44%

 1973-1  -0.92%   1.60%  -0.30%   1.47%   1.12%   2.97%

 1977-1  -0.47%   0.51%   0.48%  -0.06%   0.33%   0.79%

 1981-1   0.02%  -0.20%   0.27%   1.08%  -0.19%   0.96%

 

 Avg     -0.51%   0.01%  -0.29%   0.17%   0.42%  -0.20%

 

 1985-1  -0.09%  -0.25%  -0.76%  -1.22%   0.96%  -1.35%

 1989-1  -1.07%   0.69%   0.84%  -0.06%  -0.02%   0.37%

 1993-1  -0.53%  -0.67%   0.24%  -0.09%   0.42%  -0.62%

 1997-1   0.57%   0.27%   0.50%   1.59%   1.11%   4.05%

 2001-1   0.51%   1.30%  -1.05%   0.55%  -0.94%   0.36%

 

 Avg     -0.12%   0.27%  -0.05%   0.15%   0.31%   0.56%

 

 2005-1   0.12%  -0.02%  -0.22%   0.52%  -0.23%   0.18%

 2009-1  -0.10%   0.35%  -0.35%   0.61%   0.14%   0.65%

 2013-1  -0.03%  -1.02%  -0.84%   1.48%  -0.59%  -1.00%

 2017-1  -0.12%  -0.28%   0.16%   0.03%  -0.08%  -0.30%

 2021-1  -0.08%   0.02%  -0.18%   0.47%   0.19%   0.42%

 

 Avg     -0.04%  -0.19%  -0.29%   0.62%  -0.11%  -0.01%

 

SPX summary for PY1 1953 - 2021

 Avg     -0.21%  -0.02%  -0.20%   0.32%   0.19%   0.09%

 Win%       28%     44%     39%     67%     61%     56%

 

SPX summary for all years 1953 - 2024

 Avg     -0.16%  -0.05%   0.03%  -0.01%   0.10%  -0.10%

 Win%       47%     46%     46%     58%     58%     47%

Conclusion

The market indices had a good week so there may be a modest pullback early next week. The breadth indicators are looking good.

The strongest sectors last week were Technology and Internet while the weakest were Biotech and Utilities (down from the top last week).

I expect the major averages to be higher on Friday June 13 than they were on Friday June 6.

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