Technical Market Report For Saturday, April 23
The good news is:
- New highs have been slowly increasing.
The Negatives
In addition to the ongoing bear market, Seasonality for the coming week is awful.
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 (equal numbers of new highs and new lows).
OTC HL Ratio has remained in negative territory for 5 months.
The next chart is similar to the previous 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 also remained in negative territory,
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 moving downward.
The next chart is similar to the previous one except it shows the OTC in blue and OTC NL, in brown, has been calculated with Nasdaq data.
OTC NL resumed its downward move.
The Positives
New highs have been slowly increasing while prices have been declining. Many fund managers are required to be fully invested all the time. Utilities, Transportation and Basic Materials have been holding up better than the market averages
The first chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green.
NY NH has been moving slowly upward for nearly 2 months.
The next chart is similar to the one above except it shows the OTC in blue and OTC NH, in green, has been calculated with Nasdaq data.
OTC NH has also been drifting upward.
Seasonality
Next week includes the last 5 trading days April during the 2nd 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 2021 while SPX data runs from 1928 to 2021. There are summaries for both the 2nd year of the Presidential Cycle and all years combined.
Average returns for the coming week have been mixed and weaker during the 2nd year of the Presidential Cycle than other years.
Report for the last 5 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 2 (PY2)
Day5 Day4 Day3 Day2 Day1 Totals
1966-2 0.25% 1 1.10% 2 0.03% 3 -0.81% 4 -0.07% 5 0.50%
1970-2 -2.78% 5 -0.49% 1 -2.01% 2 -2.66% 3 1.59% 4 -6.35%
1974-2 -1.72% 3 -1.05% 4 0.23% 5 0.26% 1 0.46% 2 -1.81%
1978-2 0.25% 1 0.60% 2 0.37% 3 -0.10% 4 0.51% 5 1.63%
1982-2 0.47% 1 -0.58% 2 0.09% 3 -0.40% 4 0.30% 5 -0.12%
1986-2 0.52% 4 0.21% 5 -0.23% 1 -0.57% 2 -1.53% 3 -1.60%
1990-2 -0.21% 2 0.33% 3 0.12% 4 -0.73% 5 0.50% 1 0.00%
1994-2 0.53% 5 1.14% 1 0.47% 2 -0.34% 4 0.29% 5 2.09%
1998-2 -0.66% 5 -2.61% 1 0.63% 2 1.08% 3 0.91% 4 -0.65%
Avg 0.13% -0.30% 0.22% -0.19% 0.09% -0.06%
2002-2 -0.98% 3 0.02% 4 -2.91% 5 -0.42% 1 1.89% 2 -2.39%
2006-2 -0.40% 1 -0.13% 2 0.14% 3 0.49% 4 -0.95% 5 -0.86%
2010-2 -0.28% 1 -2.04% 2 0.01% 3 1.63% 4 -2.02% 5 -2.71%
2014-2 0.52% 4 -1.75% 5 -0.03% 1 0.72% 2 0.27% 3 -0.28%
2018-2 -1.69% 2 -0.05% 3 1.22% 4 0.02% 5 -0.75% 1 -1.26%
Avg -0.57% -0.79% -0.31% 0.48% -0.31% -1.50%
OTC summary for PY2 1966 - 2018
Averages -0.44% -0.38% -0.13% -0.13% 0.10% -0.99%
% Winners 43% 43% 71% 43% 64% 29%
MDD 4/29/1970 7.72% -- 4/29/2002 4.24% -- 4/27/1998 3.25%
OTC summary for all years 1963 - 2021
Averages -0.06% 0.01% -0.01% 0.23% 0.12% 0.28%
% Winners 56% 47% 64% 68% 59% 56%
MDD 4/29/1970 7.72% -- 4/30/2004 6.32% -- 4/29/1999 4.66%
Year 2
Day5 Day4 Day3 Day2 Day1 Totals
1930-2 -0.12% 5 0.20% 6 -2.40% 1 -0.12% 2 0.69% 3 -1.76%
1934-2 -0.55% 3 -1.37% 4 0.09% 5 -0.83% 6 -2.33% 1 -4.99%
1938-2 -2.45% 2 1.20% 3 -3.08% 4 0.10% 5 -0.82% 6 -5.03%
1942-2 0.26% 6 -0.40% 1 -0.93% 2 1.87% 3 0.66% 4 1.47%
1946-2 -0.59% 4 0.22% 5 0.86% 6 -0.11% 1 0.21% 2 0.59%
1950-2 0.00% 2 -0.39% 3 0.56% 4 0.56% 5 0.61% 6 1.34%
1954-2 0.36% 1 -0.43% 2 0.00% 3 1.51% 4 0.28% 5 1.73%
1958-2 0.79% 4 0.51% 5 -0.32% 1 -0.51% 2 1.02% 3 1.50%
Avg 0.17% -0.10% 0.03% 0.67% 0.56% 1.33%
1962-2 -0.10% 2 -1.10% 3 -0.97% 4 -1.12% 5 -1.60% 1 -4.89%
1966-2 -0.21% 1 -0.10% 2 -0.25% 3 -0.69% 4 -0.08% 5 -1.32%
1970-2 -0.33% 5 -1.58% 1 -1.46% 2 1.92% 3 -0.35% 4 -1.80%
1974-2 -1.64% 3 -0.81% 4 0.68% 5 -0.20% 1 0.34% 2 -1.63%
1978-2 1.52% 1 0.91% 2 0.19% 3 -0.99% 4 1.01% 5 2.63%
Avg -0.15% -0.54% -0.36% -0.22% -0.13% -1.40%
1982-2 0.52% 1 -1.06% 2 -0.63% 3 -0.96% 4 0.27% 5 -1.86%
1986-2 0.11% 4 0.11% 5 0.33% 1 -1.06% 2 -2.07% 3 -2.58%
1990-2 -0.21% 2 0.51% 3 0.27% 4 -1.14% 5 0.51% 1 -0.07%
1994-2 -0.25% 5 1.13% 1 -0.19% 2 -0.61% 4 0.40% 5 0.49%
1998-2 -1.05% 5 -1.93% 1 -0.13% 2 0.88% 3 1.57% 4 -0.66%
Avg -0.17% -0.25% -0.07% -0.58% 0.14% -0.93%
2002-2 -0.71% 3 -0.15% 4 -1.39% 5 -1.01% 1 1.08% 2 -2.18%
2006-2 -0.24% 1 -0.49% 2 0.28% 3 0.33% 4 0.07% 5 -0.05%
2010-2 -0.43% 1 -2.34% 2 0.65% 3 1.29% 4 -1.66% 5 -2.49%
2014-2 0.17% 4 -0.81% 5 0.32% 1 0.48% 2 0.30% 3 0.46%
2018-2 -1.34% 2 0.18% 3 1.03% 4 0.11% 5 -0.82% 1 -0.83%
Avg -0.51% -0.72% 0.18% 0.24% -0.21% -1.02%
SPX summary for PY2 1930 - 2018
Averages -0.28% -0.35% -0.28% -0.01% -0.03% -0.95%
% Winners 30% 39% 48% 43% 65% 35%
MDD 4/30/1938 5.00% -- 4/30/1934 4.91% -- 4/30/1962 4.80%
SPX summary for all years 1928 - 2021
Averages -0.17% 0.07% -0.08% 0.02% 0.20% 0.04%
% Winners 49% 58% 52% 53% 56% 57%
MDD 4/29/1932 7.02% -- 4/29/1936 6.82% -- 4/29/1931 6.02%
Conclusion
We are approaching what is the weakest part of the weakest year of the Presidential Cycle.
The strongest sectors last week were Utilities and Transportation while the weakest were Internet and Precious Metals (down from the top for the previous 3 weeks.
I expect the major averages to be lower on Friday April 29 than they were on Friday April 22.
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