Technical market report for Saturday, April 24, 2021

The good news is that last week saw the secondaries outperform the blue chips. 

The Negatives

Although new highs have remained at comfortably high levels, they have not been expanding to confirm the price increases.

The first chart covers the past six 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 first trading day of each month. The NY NH failed to confirm recent index highs.

The next chart is similar to the first one, except it shows the Nasdaq composite (OTC) in blue and the OTC NH in green. The information has been calculated with Nasdaq data. The OTC NH continued to weaken.

The next chart covers the past six months, showing the OTC in blue and a 10% trend (19-day EMA) of Nasdaq new lows (OTC NL) in brown. The OTC NL has been plotted on an inverted Y axis, so decreasing numbers of new lows move the indicator upward (up is good).

The OTC NL took a little dip last week, but recovered to its level of the previous week, 72; an uncomfortably high number.

The Positives

The secondaries outperformed the blue chips last week for a pleasant change. 

The next chart is similar to the previous one, except it shows the SPX in red and the NY NL in blue. The information has been calculated with NYSE data. I consider this one a positive because the level of the indicator (27) is not threatening.

The next chart covers the past six months, showing the SPX in red, and a 40% trend (four-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.

The NY HL Ratio took a little dip last week, but finished the week at a very strong at 92%.

The next chart is similar to the one above, except it shows the OTC in blue and the OTC HL Ratio in red. The information has been calculated with Nasdaq data. The OTC HL Ratio also took a dip, but finished the week at a comfortable 73%.

Seasonality

Next week includes the last five trading days of April during the first 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 2020, while SPX data runs from 1928 to 2020. There are summaries for both the first year of the Presidential Cycle and all years combined. Average returns for the coming week have been positive by all measures.

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)

•     Year     Day5     Day4     Day3     Day2     Day1      Totals
•  1965-1 0.35% 1 0.33% 2 0.37% 3 0.56% 4 -0.31% 5 1.31%
•  1969-1 0.50% 4 -0.19% 5 0.68% 1 1.06% 2 1.81% 3 3.86%
•  1973-1 -1.58% 2 -1.67% 3 0.32% 4 -1.20% 5 -0.51% 1 -4.65%
•  1977-1 -0.90% 1 -0.15% 2 0.71% 3 0.28% 4 0.44% 5 0.39%
•  1981-1 0.71% 5 0.15% 1 -1.02% 2 -0.65% 3 0.24% 4 -0.58%
•  1985-1 0.44% 3 0.32% 4 0.06% 5 -0.71% 1 -0.55% 2 -0.44%
•  1989-1 -0.14% 1 -0.11% 2 0.16% 3 0.66% 4 0.32% 5 0.89%
•  1993-1 -1.90% 1 1.03% 2 0.86% 3 0.04% 4 0.45% 5 0.48%
•  1997-1 0.08% 4 -1.53% 5 0.64% 1 2.10% 2 1.46% 3 2.76%
•  Avg --   -0.16%   -0.03%   0.14%   0.29%   0.39%   0.62%
•  2001-1 -2.07% 2 2.14% 3 -1.21% 4 2.01% 5 1.95% 1 2.82%
•  2005-1 0.96% 1 -1.20% 2 0.16% 3 -1.36% 4 0.92% 5 -0.52%
•  2009-1 2.55% 5 -0.88% 1 -0.33% 2 2.28% 3 0.31% 4 3.93%
•  2013-1 0.01% 3 0.62% 4 -0.33% 5 0.85% 1 0.66% 2 1.81%
•  2017-1 1.24% 1 0.70% 2 0.00% 3 0.39% 4 -0.02% 5 2.30%
•  Avg --  0.54% 0.28% -0.34% 0.83% 0.76% 2.07%

OTC summary for PY1 1965 - 2017

• Averages -- 0.02% -0.03% 0.08% 0.45% 0.51% 1.03%
• % Winners --  64%   50%   64%   71%   71%   71%
• MDD 4/30/1973: 4.57% -- 4/28/2005: 2.39% -- 4/24/2001: 2.07%

OTC summary for all years 1963 - 2020

• Averages --  -0.08% 0.01% -0.01% 0.23% 0.14% 0.30%
• % Winners --  55%   48%   66%   67%   60%   57%
• MDD 4/29/1970: 7.72% -- 4/30/2004: 6.32% -- 4/29/1999: 4.66%

SPX PY1

•      Year    Day5      Day4      Day3     Day2      Day1     Totals
•  1929-1 -0.47% 4 -0.20% 5 0.27% 6 -0.47% 1 1.61% 2 0.75%
•  1933-1 -2.40% 2 0.65% 3 -0.90% 4 1.69% 5 6.26% 6 5.29%
•  1937-1 -3.46% 1 1.67% 2 -2.68% 3 0.00% 4 2.75% 5 -1.72%
•  1941-1 -0.74% 5 -0.11% 6 0.32% 1 0.21% 2 -1.38% 3 -1.69%
•  1945-1 -0.20% 3 -0.20% 4 0.41% 5 0.61% 6 0.34% 1 0.95%
•  1949-1 0.54% 2 0.00% 3 -0.47% 4 0.14% 5 0.20% 6 0.41%
•  1953-1 0.04% 5 0.58% 1 0.74% 2 0.65% 3 -0.24% 4 1.77%
•  1957-1 0.15% 3 -0.35% 4 -0.13% 5 0.51% 1 0.02% 2 0.20%
•  Avg --  -0.04%  -0.02%   0.17%   0.42%  -0.21%   0.33%
•  1961-1 -2.08% 1 1.40% 2 0.38% 3 -0.14% 4 -0.23% 5 -0.67%
•  1965-1 0.01% 1 0.17% 2 -0.04% 3 -0.08% 4 0.20% 5 0.26%
•  1969-1 0.47% 4 0.44% 5 0.30% 1 0.74% 2 0.88% 3 2.84%
•  1973-1 -1.42% 2 -1.50% 3 0.51% 4 -1.52% 5 -0.24% 1 -4.18%
•  1977-1 -1.31% 1 -0.04% 2 0.88% 3 0.24% 4 0.24% 5 0.01%
•  Avg --  -0.87%   0.09%   0.41%   -0.15%   0.17%   -0.35%
•  1981-1 0.90% 5 0.25% 1 -0.85% 2 -0.95% 3 -0.18% 4 -0.83%
•  1985-1 0.21% 3 0.64% 4 -0.68% 5 -0.85% 1 -0.44% 2 -1.12%
•  1989-1 -0.30% 1 -0.63% 2 0.06% 3 0.86% 4 0.02% 5 0.02%
•  1993-1 -0.80% 1 1.03% 2 0.00% 3 0.20% 4 0.30% 5 0.73%
•  1997-1 -0.32% 4 -0.75% 5 0.99% 1 2.73% 2 0.92% 3 3.57%
•  Avg --  -0.06%   0.11%   -0.10%   0.40%   0.12%   0.47%
•  2001-1 -1.22% 2 1.59% 3 0.47% 4 1.50% 5 -0.29% 1 2.06%
•  2005-1 0.87% 1 -0.89% 2 0.40% 3 -1.14% 4 1.19% 5 0.43%
•  2009-1 1.68% 5 -1.01% 1 -0.27% 2 2.16% 3 -0.10% 4 2.47%
•  2013-1 0.00% 3 0.47% 4 -0.25% 5 0.72% 1 0.25% 2 1.19%
•  2017-1 1.08% 1 0.61% 2 -0.05% 3 0.06% 4 -0.19% 5 1.51%
•  Avg -- 0.48%   0.15%   0.06%   0.66%   0.17%   1.53%

SPX Summary for PY1 1929 - 2017

• Averages --  -0.38% 0.17% -0.03% 0.34% 0.52% 0.62%
• % Winners --  48%   52%   57%   65%   61%   74%
• MDD 4/28/1937: 4.48% -- 4/30/1973: 4.12% -- 4/27/1933: 2.65%

SPX Summary for all years 1928 - 2020

• Averages --  -0.17% 0.07% -0.08% 0.01% 0.21% 0.04%
• % Winners --  48%   58%   52%   53%   56%   57%
• MDD 4/29/1932: 7.02% -- 4/29/1936: 6.82% -- 4/29/1931: 6.02%

Conclusion

Recent highs have been unconfirmed by breadth. However, the secondaries outperformed the blue chips last week. The strongest sectors last week were healthcare and precious metals, while the weakest were internet and energy.

I expect the major averages to be higher on Friday, April 30 than they were on Friday, April 23. Last week the Russell 2000 was up while the other major indices were down. So I am calling last week's positive forecast a tie.