The good news is:

• The market had its second good week in a row.

 

The Negatives

The market is overbought.  The S&P 500 has been up for 9 consecutive days.

The first chart covers the last 6 months showing the 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; Still no signs of life. 

 

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; There is a hint of life, but, not so hot with the index only 11% off its all time high.

 

The Positives

New lows have declined to the point of insignificance.

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 remained in positive territory; not very deeply in positive territory, but positive. 

 

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 did its job of signaling a bottom.

 

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 has also performed as expected of a bottom indicator.

 

Seasonality

Next week includes the 5 trading days prior to the 2^nd Friday of May 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 mixed; stronger during the 1^st year of the Presidential Cycle than other years.

 

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

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  -0.12%  -0.25%  -0.46%   0.72%  -0.60%  -0.71%

 1969-1   0.34%   0.19%  -0.38%  -0.02%   0.32%   0.45%

 1973-1  -0.37%   0.17%  -0.12%  -0.20%  -1.11%  -1.62%

 1977-1  -0.14%   0.41%  -0.25%   0.04%   0.46%   0.53%

 1981-1  -1.55%  -0.83%   0.20%   0.79%   0.55%  -0.83%

 

 Avg     -0.37%  -0.06%  -0.20%   0.27%  -0.07%  -0.44%

 

 1985-1  -0.16%   0.37%   0.06%   0.78%   1.48%   2.53%

 1989-1  -0.33%  -0.08%   0.16%   0.23%   0.98%   0.95%

 1993-1   0.20%   0.04%  -0.20%  -0.89%   0.11%  -0.74%

 1997-1   2.60%  -0.81%  -0.41%   0.60%   0.32%   2.30%

 2001-1  -0.82%   1.16%  -1.92%  -1.28%  -1.01%  -3.87%

 

 Avg      0.30%   0.13%  -0.46%  -0.11%   0.38%   0.23%

 

 2005-1   0.63%  -0.85%   0.45%  -0.39%   0.66%   0.49%

 2009-1   2.58%  -0.54%   0.28%  -2.44%   1.33%   1.22%

 2013-1   0.42%   0.11%   0.49%  -0.12%   0.80%   1.71%

 2017-1   0.03%   0.29%   0.14%  -0.22%   0.09%   0.34%

 2021-1  -2.55%  -0.09%  -2.67%   0.72%   2.32%  -2.27%

 

 Avg      0.22%  -0.22%  -0.26%  -0.49%   1.04%   0.30%

 

OTC summary for PY1 1965 - 2021 

 Avg      0.05%  -0.05%  -0.31%  -0.11%   0.45%   0.03%

 Win%       47%     53%     47%     47%     80%     60%

 

OTC summary for all years 1963 - 2024

 Avg      0.00%  -0.11%  -0.10%  -0.03%   0.19%  -0.05%

 Win%       58%     50%     50%     58%     60%     53%

 

SPX PY1

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1953-1   1.09%   0.12%  -0.12%  -0.40%   0.24%   0.93%

 1957-1  -0.15%  -0.30%   0.39%   0.11%   0.50%   0.54%

 1961-1  -0.17%   0.09%  -0.09%  -0.03%   0.09%  -0.11%

 

 1965-1  -0.21%  -0.12%   0.44%   0.37%  -0.19%   0.28%

 1969-1   0.36%   0.47%  -0.18%   0.41%  -0.05%   1.01%

 1973-1  -0.42%   0.65%  -0.73%  -0.81%  -1.25%  -2.57%

 1977-1  -0.31%   0.29%  -0.69%  -0.05%   0.30%  -0.46%

 1981-1  -1.54%  -0.27%   0.35%   0.68%  -0.01%  -0.79%

 

 Avg     -0.43%   0.20%  -0.16%   0.12%  -0.24%  -0.50%

 

 1985-1  -0.05%   0.43%  -0.08%   0.72%   1.30%   2.32%

 1989-1  -0.52%  -0.26%   0.20%   0.38%   2.24%   2.03%

 1993-1   0.11%   0.35%   0.10%  -1.25%   0.08%  -0.62%

 1997-1   2.13%  -0.31%  -1.47%   0.63%   0.49%   1.48%

 2001-1  -0.24%  -0.18%  -0.45%  -0.03%  -0.76%  -1.66%

 

 Avg      0.29%   0.01%  -0.34%   0.09%   0.67%   0.71%

 

 2005-1   0.64%  -1.07%   0.42%  -1.00%  -0.46%  -1.47%

 2009-1   3.39%  -0.38%   1.74%  -1.32%   2.41%   5.83%

 2013-1   0.19%   0.52%   0.41%  -0.37%   0.43%   1.19%

 2017-1   0.00%  -0.10%   0.11%  -0.22%  -0.15%  -0.35%

 2021-1  -1.04%  -0.87%  -2.14%   1.22%   1.49%  -1.35%

 

 Avg      0.64%  -0.38%   0.11%  -0.34%   0.75%   0.77%

 

SPX summary for PY1 1953 - 2021 

 Avg      0.18%  -0.05%  -0.10%  -0.05%   0.37%   0.35%

 Win%       44%     44%     50%     44%     61%     50%

 

SPX summary for all years 1953 - 2024

 Avg     -0.03%  -0.03%  -0.06%  -0.08%   0.12%  -0.08%

 Win%       48%     46%     50%     47%     56%     42%

 

Conclusion

The strongest sectors last week were Technology (for the 2^nd week) and Finance while the weakest were Energy and Precious Metals (for the 2^nd week).

I expect the major averages to be higher on Friday May 9 than they were on Friday May 2. 

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