The good news is:

• We might be looking at the 1st of what are likely to be multiple bottoms.

The Negatives

Very few of us could have imagined the government willfully shutting down the economy to relieve imagined pressure on the health care system or committing economic suicide for any other reason.

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 1st 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.

OTC HL Ratio at 1.8% Friday was UP from 1.2% Thursday

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 finished the week at 0.5%, a record low.

The Positives

 "Buy when there's blood in the streets, even if the blood is your own." Baron Rothschild.

New lows on the NASDAQ peaked at a record 2097 on March 12 and declined to 329 last Friday, the lowest level since March 4.

On the NYSE new lows peaked at 2377 on March 12 and declined to 299 last Friday also the lowest level since March 4.

329 and 299 are serious numbers and, if we are looking at a bottom they will diminish quickly in the next few days.

The next chart covers the past 6 months showing the NASDAQ composite (COMP) in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in black.OTC NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward. 

We have another record.899 is the highest (lowest on the chart) value ever achieved by this indicator.It turned upward Friday and closed the week at 834.

The next chart is similar to the first one except it shows the S&P 500 in red and NY NL has been calculated from NYSE data.

Still no record here, but, getting closer.947 was the value Friday up from 1019 Thursday.A little short of the record for NY NL set October 10, 2008 at 1129.

The buy the dips crowd and Plunge Protection Team (PPT) AKA The working group on Financial Markets were out in force again last week.

Volume of ADVANCING issues on the OTC set another record last week.

The chart below covers the past 6 months showing the OTC in blue and a 5% trend (39 day EMA) of volume of advancing issues (OTC UV 5%) in green.

OTC UV 5% set another record Friday.

The next chart is similar to the one above except it shows the SPX in red and NY UV 5% has been calculated with NYSE data.

No records here, but buyers are out there trying to catch the falling knives.

Seasonality

Next week includes the 5 trading days prior to the 4th Friday of March during the 4th year of the Presidential Cycle. The tables below show the daily change, on a percentage basis, for that period.The rows with 0’s were in years when Good Friday occurred in March. 

OTC data covers the period from 1963 to 2018 while SPX data runs from 1953 to 2018.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. 

Average returns for the coming week have been modestly negative by all measures.  

Given the current panic, seasonal averages are not relevant.

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

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 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1968-4 1.08% -0.05%-0.36% 0.46% -0.40% 0.73%

 1972-4-0.37% -1.41% 0.50% 0.81% 0.13%-0.34%

 1976-4 0.17% 0.75% 0.63% -0.29% 0.24% 1.50%

 1980-4-3.02% -1.55%-0.23% -6.15% 4.16%-6.79%

 1984-4-0.68% 0.43%-0.10% -0.68% -0.32%-1.34%

 1988-4-0.79% 0.31% 0.09% -1.18% -0.81%-2.38%

 1992-4-0.39% -0.51% 0.13% -0.66% -1.74%-3.17%

 1996-4 1.35% -0.17%-0.96% -0.18% 0.22% 0.25%

 Avg -0.71% -0.30%-0.21% -1.77% 0.30%-2.69%

 2000-4-3.92% 2.21% 3.25% 1.56% 0.45% 3.55%

 2004-4-1.58% -0.42% 0.40% 3.02% -0.36% 1.06%

 2008-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 2012-4 0.75% -0.14% 0.04% -0.39% 0.15% 0.42%

 2016-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 Avg -1.58% 0.55% 1.23% 1.40% 0.08% 1.68%

OTC summary for PY4 1964 - 2016 

 Avg -0.67% -0.05% 0.31% -0.33% 0.16%-0.59%

 Win% 36% 36% 64% 36% 55% 55%

OTC summary for all years 1963 - 2019

 Avg -0.03% -0.22% 0.08% 0.14% -0.06%-0.09%

 Win% 51% 43% 53% 53% 53% 53%

SPX PY4

 Year Mon Tue Wed Thur Fri Totals

 1956-4 0.93% 0.58%-1.31% 1.02% 0.23% 1.44%

 1960-4 0.11% 0.40% 0.81% 0.43% 0.00% 1.75%

 1964-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 1968-4 0.55% -0.67%-0.01% -0.73% 0.10% -0.76%

 1972-4-0.31% -0.84% 0.14% 0.85% -0.21%-0.36%

 1976-4 0.13% 1.52% 1.15% -0.55% 0.00% 2.25%

 Avg0.12% 0.10% 0.52% 0.00% -0.06% 0.72%

 1980-4-2.96% -0.09%-0.51% -0.47% 2.50%-1.53%

 1984-4-0.94% 0.68%-0.13% -1.24% 0.11%-1.51%

 1988-4-0.88% 0.04% 0.03% -2.07% -1.84%-4.72%

 1992-4-0.34% -0.25%-0.33% 0.08% -1.07%-1.91%

 1996-4 1.75% -0.15%-0.26% -0.12% 0.22% 1.44%

 Avg -0.67% 0.05%-0.24% -0.76% -0.01%-1.65%

 2000-4-0.54% 2.56% 0.45% 1.79% 0.01% 4.26%

 2004-4-1.30% -0.13%-0.24% 1.64% -0.10%-0.13%

 2008-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 2012-4 0.40% -0.30%-0.19% -0.72% 0.31% -0.50%

 2016-4 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

 Avg -0.48% 0.71% 0.01% 0.90% 0.07% 1.21%

SPX summary for PY4 1956 - 2016 

 Avg -0.26% 0.26%-0.03% -0.01% 0.02%-0.02%

 Win% 46% 46% 38% 46% 64% 38%

SPX summary for all years 1953 - 2019

 Avg0.04% -0.14% 0.05% -0.05% -0.13%-0.22%

 Win% 41% 45% 43% 40% 52% 36%

Conclusion

The high volume of advancing issues and sharp decline in the number of new lows on Friday is encouraging.

The strongest sectors last week were Telecom; the weakest were Banks and Finance.

I expect the major averages to be higher on Friday March 27 than they were on Friday March 20.