The good news is:

• Hard to find.

The Negatives

The bear market rally we have witnessed for the past couple weeks appears to be over.

The first chart covers the past 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 1st trading day of each month.

NY NH has begun declining from a low level.

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

OTC NH held steady, but at a very low level. 

The next 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 horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level.

OTC HL Ratio never got above the neutral line during the rally. 

The next chart is similar to the previous one except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data.

NY HL Ratio returned to negative territory last week,

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 turned downward for the first time since the rally began.

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 also turned downward.

The Positives

Nothing to say here.

Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of 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 2020 while SPX data runs from 1953 to 2020.  There are summaries for both the 2nd 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 modest and weaker during the 2nd year of the Presidential Cycle than other years. 

Report for the week before the 3rd Friday of April.

The number following the year is the position in the Presidential Cycle.

Daily returns from Monday through 3rd Friday.


OTC Presidential Year 2 (PY2)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1966-2   0.68%  -0.25%  -0.45%   0.57%   0.20%   0.75%

 1970-2  -0.83%  -1.56%  -0.92%  -1.35%  -1.42%  -6.09%

 1974-2  -0.04%  -1.99%  -1.72%  -1.05%   0.23%  -4.57%

 1978-2   0.56%  -0.43%   0.19%   1.09%   0.41%   1.82%


 1982-2   0.07%  -0.24%   0.21%   0.73%   0.69%   1.47%

 1986-2   0.51%   0.23%   1.55%   0.60%   0.16%   3.05%

 1990-2  -1.34%  -0.21%   0.33%   0.12%  -0.73%  -1.84%

 1994-2  -1.03%  -1.05%  -1.03%   1.87%   0.53%  -0.71%

 1998-2   1.10%   0.89%   0.72%  -1.88%  -0.66%   0.16%


 Avg     -0.14%  -0.08%   0.36%   0.29%   0.00%   0.43%


 2002-2  -0.14%   3.59%  -0.34%  -0.46%  -0.31%   2.35%

 2006-2  -0.40%  -0.13%   0.14%   0.49%  -0.95%  -0.86%

 2010-2  -0.05%   0.81%   0.17%   0.58%   0.44%   1.96%

 2014-2   0.64%   0.97%  -0.83%   0.52%  -1.75%  -0.46%

 2018-2   0.70%   1.74%   0.19%  -0.78%  -1.26%   0.58%


 Avg      0.15%   1.40%  -0.13%   0.07%  -0.77%   0.71%


OTC summary for PY2 1966 - 2018 

 Avg      0.03%   0.17%  -0.13%   0.07%  -0.32%  -0.17%

 Win%       50%     43%     57%     64%     50%     57%


OTC summary for all years 1963 - 2021

 Avg     -0.35%   0.28%   0.32%   0.21%   0.17%   0.63%

 Win%       47%     59%     69%     61%     63%     68%


SPX PY2

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1954-2  -0.64%  -0.04%  -0.40%   0.14%   0.36%  -0.57%

 1958-2   0.52%  -0.30%   0.00%   0.79%   0.51%   1.52%


 1962-2  -0.09%  -0.10%  -1.10%  -0.97%  -1.12%  -3.38%

 1966-2  -0.45%  -0.01%   0.56%   0.37%  -0.16%   0.31%

 1970-2  -0.68%  -0.86%  -0.18%  -0.98%  -0.24%  -2.94%

 1974-2  -0.39%  -1.68%  -1.64%  -0.81%   0.68%  -3.85%

 1978-2   1.65%  -1.08%   0.46%   0.72%  -0.21%   1.54%


 Avg      0.01%  -0.75%  -0.38%  -0.33%  -0.21%  -1.66%


 1982-2  -0.09%  -1.08%   0.24%   1.27%   1.24%   1.58%

 1986-2   0.56%   0.19%   1.89%   0.33%  -0.27%   2.70%

 1990-2  -1.21%  -0.21%   0.51%   0.27%  -1.14%  -1.79%

 1994-2  -0.83%   0.02%  -0.13%   1.53%  -0.25%   0.34%

 1998-2   0.08%   0.24%   0.33%  -0.92%  -1.05%  -1.32%


 Avg     -0.30%  -0.17%   0.57%   0.50%  -0.29%   0.30%


 2002-2  -0.76%   2.34%  -0.20%  -0.14%   0.06%   1.30%

 2006-2  -0.24%  -0.49%   0.28%   0.33%   0.07%  -0.05%

 2010-2   0.45%   0.81%  -0.10%   0.23%   0.71%   2.09%

 2014-2   0.38%   0.41%  -0.22%   0.17%  -0.81%  -0.07%

 2018-2   0.81%   1.07%   0.08%  -0.57%  -0.85%   0.53%


 Avg      0.13%   0.83%  -0.03%   0.00%  -0.16%   0.76%


SPX summary for PY2 1954 - 2018 

 Avg     -0.06%  -0.05%   0.02%   0.10%  -0.15%  -0.12%

 Win%       41%     41%     50%     65%     41%     53%


SPX summary for all years 1953 - 2021

 Avg     -0.14%   0.27%   0.13%   0.08%   0.00%   0.34%

 Win%       48%     55%     59%     61%     51%     65%

Conclusion

The counter trend rally we have been experiencing appears to be over.

Last week new lows began increasing from already high levels.

The strongest sectors last week were Utilities (for the 3rd week in a row) and Precious metals (for the 2nd week in a row) while the weakest were Electronics and Banks (both for the 2nd week in a row.

I expect the major averages to be lower on Friday April 15 than they were on Friday April 8.

Last week's positive forecast was a miss.