Technical Market Report For May 6, 2023

The good news is:

  • The Nasdaq composite (OTC) closed at its high 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 moved side ways last week along with everything else. 

 

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 remained in modestly negative territory.  

 

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 continued moving 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 declined last week.

 

Summation indices are running totals of oscillator values. Short term momentum indicators applied to summation indices make them binary so position is all that matters.

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 Nasdaq.  

All the Nasdaq SI’s momentum indicators remained negative last week. 

 

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

NYSE SI’s momentum indicators also remained negative last week.

 

The Positives

Big tech is holding up the OTC and SPX.

 

Seasonality

Next week includes the first 5 trading days prior to the 2nd Friday of May 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. 

 

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 3 (PY3)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1963-3  -0.45%  -0.51%   0.09%   0.09%  -0.06%  -0.84%

 1967-3   1.17%  -0.65%  -1.31%  -0.64%   0.53%  -0.89%

 1971-3  -0.46%   0.16%   0.04%   0.16%   0.17%   0.07%

 1975-3   1.11%  -0.41%   1.24%   0.38%   0.85%   3.17%

 1979-3  -2.33%  -0.77%   0.57%  -0.48%  -0.02%  -3.03%


 Avg     -0.19%  -0.43%   0.13%  -0.10%   0.30%  -0.30%


 1983-3   0.33%   0.56%  -0.48%  -0.24%   0.59%   0.76%

 1987-3   0.00%   0.95%  -0.01%   0.06%   0.13%   1.13%

 1991-3  -0.13%   0.01%   0.20%   1.08%  -0.88%   0.28%

 1995-3   0.68%  -0.13%  -0.06%   0.73%   0.60%   1.82%

 1999-3   0.91%   1.60%   1.55%  -0.94%  -2.10%   1.02%


 Avg      0.36%   0.60%   0.24%   0.14%  -0.33%   1.00%


 2003-3   0.08%   1.31%  -1.11%  -1.13%   2.04%   1.18%

 2007-3  -0.05%   0.03%   0.18%  -1.65%   1.12%  -0.37%

 2011-3   0.55%   1.01%  -0.93%   0.63%  -1.21%   0.05%

 2015-3   0.23%  -1.55%  -0.40%   0.53%   1.17%  -0.02%

 2019-3  -0.50%  -1.96%  -0.26%  -0.41%   0.08%  -3.05%


 Avg      0.06%  -0.23%  -0.50%  -0.41%   0.64%  -0.44%


OTC summary for PY3 1963 - 2019 

 Avg      0.08%  -0.02%  -0.05%  -0.12%   0.20%   0.09%

 Win%       60%     53%     47%     53%     67%     60%


OTC summary for all years 1963 - 2022

 Avg     -0.02%  -0.10%  -0.11%  -0.04%   0.20%  -0.07%

 Win%       57%     52%     50%     57%     62%     52%


SPX PY3

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1955-3   0.11%  -0.21%  -1.14%  -0.59%   0.65%  -1.18%

 1959-3   0.00%   0.17%  -0.24%  -1.27%   0.77%  -0.56%


 1963-3  -0.71%  -0.13%   0.82%   0.49%   0.24%   0.70%

 1967-3   0.15%  -1.04%  -0.27%   0.43%  -0.29%  -1.01%

 1971-3  -0.50%   0.25%   0.27%  -0.20%  -0.47%  -0.64%

 1975-3   0.96%  -1.60%   0.50%   0.54%   1.08%   1.48%

 1979-3  -1.66%   0.15%   0.29%  -0.95%   0.00%  -2.16%


 Avg     -0.35%  -0.47%   0.32%   0.06%   0.14%  -0.33%


 1983-3  -0.17%   0.06%  -0.57%  -0.43%   0.40%  -0.72%

 1987-3   0.46%   2.07%   0.04%  -0.26%  -0.45%   1.86%

 1991-3  -0.19%  -0.73%   0.32%   1.25%  -1.96%  -1.31%

 1995-3   0.74%  -0.08%   0.15%   0.00%   0.23%   1.04%

 1999-3  -0.35%   1.14%   0.62%   0.26%  -2.18%  -0.50%


 Avg      0.10%   0.49%   0.11%   0.17%  -0.79%   0.07%


 2003-3  -0.38%   0.85%  -0.51%  -1.01%   1.43%   0.38%

 2007-3   0.26%  -0.12%   0.32%  -1.40%   0.96%   0.03%

 2011-3   0.47%   0.81%  -1.11%   0.49%  -0.81%  -0.15%

 2015-3   0.29%  -1.18%  -0.45%   0.38%   1.35%   0.39%

 2019-3  -0.45%  -1.65%  -0.16%  -0.30%   0.37%  -2.19%


 Avg      0.04%  -0.26%  -0.38%  -0.37%   0.66%  -0.31%


SPX summary for PY3 1955 - 2019 

 Avg     -0.06%  -0.07%  -0.07%  -0.15%   0.08%  -0.27%

 Win%       50%     47%     53%     47%     63%     41%


SPX summary for all years 1955 - 2022

 Avg     -0.04%  -0.03%  -0.07%  -0.09%   0.12%  -0.11%

 Win%       46%     46%     50%     47%     57%     41%

 

Conclusion

Market breadth was lousy again last week.  Most of the Indices were down for the week except the OTC which beat its previous high for the year by 0.07%.

The strongest sectors last week were Precious Metals and Transportation while the weakest were Energy (for the 3rd week in a row) and Banks.

I expect the major averages to be lower on Friday, May 12 than they were on Friday, May 5.

Last week all of the major indices were down except the OTC so I am calling last week's negative forecast a tie.

 


More By This Author:

Technical Market Report For April 29, 2023
Technical Market Report For April 22, 2023
Technical Market Report: Saturday, April 15
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