The good news is:

• The bottom for this decline should be easy to identify by a sharp decrease in the number of new lows.

 

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 continues to find lower lows for the period shown.

 

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 ditto.

 

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 (equal numbers of new highs and new lows).

NY HL ratio has remained in negative territory for over a month. 

 

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 ditto.

 

The next chart covers the past 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 downward.

 

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 downward.

 

The Positives

The positives are elusive. 

 

Seasonality

Next week includes the last trading day of March and the first 4 trading days of April 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 1928 to 2024.  There are summaries for both the 1^st year of the Presidential Cycle and all years combined.  Seasonality for next week has been mixed and modest.

Report for the last trading day of March and the first 4 days of April.

The number following the year represents its position in the Presidential Cycle.

The number following the daily return represents the day of the week;

1 = Monday, 2 = Tuesday etc.

 

OTC Presidential Year 1 (PY1)

               Day1      Day1      Day2      Day3      Day4      Totals

 1965-1       0.10% 3   0.27% 4   0.21% 5   0.37% 1   0.18% 2     1.14%

 1969-1       0.34% 5   0.74% 2   0.26% 3  -0.18% 4  -0.79% 1     0.37%

 1973-1      -0.62% 5  -1.42% 1  -1.14% 2  -1.38% 3  -0.77% 4    -5.33%

 1977-1      -0.11% 4   0.44% 5  -0.68% 1  -0.26% 2   0.25% 3    -0.36%

 1981-1       0.58% 2   0.55% 3   0.29% 4   0.33% 5  -0.65% 1     1.11%

 

 Avg          0.06%     0.12%    -0.21%    -0.22%    -0.36%      -0.62%

 

 1985-1       0.37% 5   0.40% 1  -0.39% 2  -0.49% 3  -0.15% 4    -0.26%

 1989-1       0.54% 5   0.23% 1  -0.12% 2   0.28% 3  -0.02% 4     0.90%

 1993-1       0.57% 3  -0.51% 4  -2.45% 5   0.13% 1  -0.98% 2    -3.24%

 1997-1      -2.22% 1  -0.39% 2  -1.31% 3   1.07% 4   1.89% 5    -0.97%

 2001-1       1.08% 5  -3.11% 1  -6.17% 2  -2.04% 3   8.92% 4    -1.32%

 

 Avg          0.07%    -0.68%    -2.08%    -0.21%     1.93%      -0.98%

 

 2005-1      -0.32% 4  -0.72% 5   0.32% 1   0.41% 2  -0.01% 3    -0.32%

 2009-1       1.78% 2   1.51% 3   3.29% 4   1.20% 5  -0.93% 1     6.84%

 2013-1       0.34% 4  -0.87% 1   0.48% 2  -1.11% 3   0.20% 4    -0.96%

 2017-1      -0.04% 5  -0.29% 1   0.07% 2  -0.58% 3   0.25% 4    -0.60%

 2021-1       1.54% 3   1.76% 4   1.67% 1  -0.05% 2  -0.07% 3     4.86%

 

 Avg          0.66%     0.28%     1.17%    -0.03%    -0.11%       1.96%

 

OTC summary for PY1 1965 - 2021

Averages      0.26%    -0.09%    -0.38%    -0.15%     0.49%       0.12%

% Winners       67%       53%       53%       47%       40%         40%

MDD  4/4/2001  10.95% --  4/5/1973  5.22% --  4/2/1997  3.88%

 

OTC summary for all years 1963 - 2024

Averages      0.18%    -0.05%     0.24%     0.04%     0.21%       0.62%

% Winners       62%       53%       66%       65%       56%         61%

MDD 4/4/2001  10.95% --  4/4/2000  9.27% --  4/1/2020  5.32%

 

SPX PY1

               Day1      Day1      Day2      Day3      Day4      Totals

 1929-1       1.75% 4  -2.55% 1   1.17% 2  -1.23% 3   1.77% 4     0.91%

 1933-1      -3.31% 5   0.51% 6  -0.17% 1   0.51% 2   0.85% 3    -1.60%

 1937-1      -0.17% 3  -1.17% 4  -1.24% 5   0.29% 6   0.46% 1    -1.84%

 1941-1       0.40% 1   0.10% 2   0.40% 3   1.50% 4  -0.20% 5     2.21%

 

 1945-1       0.22% 6   0.95% 1   0.15% 2  -0.15% 3  -0.73% 4     0.45%

 1949-1      -0.99% 4  -0.80% 5   0.40% 6  -0.13% 1  -0.13% 2    -1.65%

 1953-1      -1.25% 2  -0.16% 3  -0.08% 4  -2.46% 1   0.41% 2    -3.54%

 1957-1      -0.16% 5   0.07% 1   0.63% 2   0.27% 3  -0.22% 4     0.59%

 1961-1       0.20% 4   0.83% 1   0.09% 2  -0.30% 3   0.23% 4     1.05%

 

 Avg         -0.39%     0.18%     0.24%    -0.55%    -0.09%      -0.62%

 

 1965-1      -0.05% 3   0.19% 4   0.24% 5   0.00% 1  -0.03% 2     0.35%

 1969-1       0.41% 5  -0.09% 2  -0.63% 3  -0.10% 4  -0.78% 1    -1.20%

 1973-1      -1.06% 5  -1.20% 1  -0.85% 2  -0.43% 3  -0.23% 4    -3.77%

 1977-1      -0.12% 4   0.80% 5  -0.99% 1  -0.22% 2  -0.10% 3    -0.63%

 1981-1       1.28% 2   0.42% 3  -0.18% 4  -0.61% 5  -1.15% 1    -0.24%

 

 Avg          0.09%     0.02%    -0.48%    -0.27%    -0.46%      -1.10%

 

 1985-1       0.62% 5   0.34% 1  -0.41% 2  -0.79% 3  -0.04% 4    -0.28%

 1989-1       0.80% 5   0.52% 1  -0.36% 2   0.31% 3  -0.32% 4     0.95%

 1993-1      -0.07% 3  -0.30% 4  -1.98% 5   0.20% 1  -0.26% 2    -2.40%

 1997-1      -2.17% 1   0.33% 2  -1.25% 3   0.03% 4   1.01% 5    -2.05%

 2001-1       1.08% 5  -1.25% 1  -3.44% 2  -0.29% 3   4.37% 4     0.47%

 

 Avg          0.05%    -0.07%    -1.49%    -0.11%     0.95%      -0.66%

 

 2005-1      -0.07% 4  -0.65% 5   0.27% 1   0.45% 2   0.23% 3     0.23%

 2009-1       1.31% 2   1.66% 3   2.87% 4   0.97% 5  -0.83% 1     5.98%

 2013-1       0.41% 4  -0.45% 1   0.52% 2  -1.05% 3   0.40% 4    -0.17%

 2017-1      -0.23% 5  -0.16% 1   0.06% 2  -0.31% 3   0.19% 4    -0.45%

 2021-1       0.36% 3   1.18% 4   1.44% 1  -0.10% 2   0.15% 3     3.04%

 

 Avg          0.36%     0.32%     1.03%    -0.01%     0.03%       1.73%

 

SPX summary for PY1 1929 - 2021

Averages     -0.03%    -0.04%    -0.14%    -0.15%     0.21%      -0.15%

% Winners       50%       54%       50%       38%       46%         46%

MDD  4/4/2001  4.92% --  4/6/1953  3.90% --  4/5/1973  3.72%

 

SPX summary for all years 1928 - 2024

Averages     -0.12%     0.11%     0.23%     0.05%     0.21%       0.48%

% Winners       45%       62%       60%       53%       61%         63%

MDD 4/5/1932  13.05% --  4/1/2020  5.94% --  4/4/2001  4.92%

 

April

Since 1963, over all years, the OTC in April has been up 66% of the time with an average gain of 1.5%.  During the 1^st year of the Presidential Cycle April has been up 80% of the time with an average gain of 2.9% (helped considerably by a 15% gain in 2001 and a 12.3% gain in 2009).  The best April ever for the OTC was 2001 (+15.0%), the worst 1970 (-18.5%).

The average month has 21 trading days.  The chart below has been calculated by averaging the daily percentage change for each of the 1^st 11 trading days and each of the last 10.  In months when there were more than 21 trading days some of the days in the middle were not counted.  In months when there were less than 21 trading days some of the days in the middle of the month were counted twice.  Dashed vertical lines have been drawn after the 1^st trading day and at 5 trading day intervals after that.  The line is solid on the 11^th trading day, the dividing point.

In the chart below the blue line shows the average daily performance of the OTC in April over all years since 1963 in blue, while the green line shows the average during the 1^st year of the Presidential Cycle over the same period.

 

Since 1928 the SPX has been up 64% of the time in April with an average gain of 1.3%.  During the 1^st year of the Presidential Cycle the SPX has been up 63% of the time with an average gain of 2.8%.  The best April for the SPX was 1933 (+42.2%) the worst 1932 (-20.2%).

The chart below is similar to the one above except it shows the average daily average performance over all years since 1928 for the SPX in April in red and the average daily performance during the 1^st year of the Presidential Cycle, over the same period, in green.

 

Since 1979 the Russell 2000 (R2K) has been up 61% of the time in April with an average gain of 1.3%.  During the 1^st year of the Presidential Cycle the R2K has been up 64% of the time with an average gain of 2.1%.  The best April for the R2K 2009 (+15.3%), the worst 2022 (-10.0%)

The chart below is similar to those above except it shows the average daily performance of the R2K, over all years since 1979, in April in magenta and the average daily performance during the 1^st year of the Presidential Cycle in green.

 

Since 1885 the Dow Jones Industrial Average (DJIA) has been up 61% of the time in April with an average gain of 1.3%.  During the 1^st year of the Presidential Cycle the DJIA has been up 60% of the time in April with an average gain of 2.3%.  The best April for the DJIA 1933 (+40.2%), the worst 1932 (-23.4%)

The chart below is similar to those above except it shows the average daily performance over all years for the DJIA in April in blue and the average performance during the 1^st year of the Presidential Cycle in green.

 

Conclusion

The breadth indicators show the possibility of a serious decline in prices in the near future.

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

I expect the major averages to be lower on Friday April 4 than they were on Friday March 28. 

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