The good news is:

• The market had a good week.

The Negatives

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 rose last week to its highest level in nearly 4 months, however it has remained in negative territory for 8 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 rose last week to its highest level in over a month, however, it remained negative territory,

The Positives

New lows continued to decline 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 rose to its best level in nearly 4 months.  

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 ditto.

Seasonality

Next week includes the last 5 trading days of July 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, but mostly negative..

Report for the last 5 days of July.

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      -2.64% 1   0.49% 2  -0.92% 3   0.30% 4  -0.21% 5    -2.98%

 1970-2       0.01% 1   0.13% 2   0.46% 3   0.38% 4  -0.22% 5     0.76%

 1974-2      -1.50% 4  -0.93% 5  -1.84% 1  -0.27% 2  -1.84% 3    -6.37%

 1978-2       0.16% 2   0.56% 3   0.52% 4   0.56% 5   0.39% 1     2.19%


 1982-2      -0.38% 1  -0.43% 2  -1.37% 3  -0.46% 4  -0.15% 5    -2.79%

 1986-2       0.29% 5  -1.33% 1  -0.73% 2  -0.32% 3   0.15% 4    -1.95%

 1990-2       0.65% 3   0.00% 4  -0.64% 5  -0.73% 1  -0.26% 2    -0.97%

 1994-2       0.03% 1  -0.17% 2  -0.49% 3   0.04% 4   1.37% 5     0.77%

 1998-2       0.12% 1  -1.90% 2  -0.79% 3   2.02% 4  -2.46% 5    -3.01%


 Avg          0.14%    -0.77%    -0.81%     0.11%    -0.27%      -1.59%


 2002-2      -3.89% 4   1.78% 5   5.79% 1   0.67% 2  -1.19% 3     3.17%

 2006-2       0.58% 2  -0.17% 3  -0.77% 4   1.93% 5  -0.13% 1     1.45%

 2010-2       1.19% 1  -0.36% 2  -1.04% 3  -0.57% 4   0.13% 5    -0.64%

 2014-2      -0.50% 5  -0.10% 1  -0.05% 2   0.45% 3  -2.09% 4    -2.29%

 2018-2       1.17% 3  -1.01% 4  -1.46% 5  -1.39% 1   0.55% 2    -2.14%


 Avg         -0.29%     0.03%     0.50%     0.22%    -0.54%      -0.09%


OTC summary for PY2 1966 - 2018

Averages     -0.34%    -0.25%    -0.24%     0.19%    -0.43%      -1.06%

% Winners       64%       29%       21%       57%       36%         36%

MDD  7/31/1974  6.22% --  7/25/2002  3.89% --  7/30/2018  3.81%


OTC summary for all years 1963 - 2021

Averages      0.04%     0.00%    -0.09%    -0.01%    -0.04%      -0.11%

% Winners       54%       47%       46%       61%       49%         56%

MDD 7/28/2000  9.10% --  7/31/1974  6.22% --  7/31/1969  4.97%


SPX PY2

               Day5      Day4      Day3      Day2      Day1      Totals

 1930-2       0.98% 6   0.51% 1  -0.78% 2  -2.63% 3   0.62% 4    -1.31%

 1934-2      -7.83% 4   2.87% 5   1.51% 6  -0.69% 1   0.12% 2    -4.02%

 1938-2      -1.41% 2  -2.93% 3   1.88% 4  -1.20% 5   0.57% 6    -3.09%


 1942-2       0.00% 1  -0.12% 2  -1.62% 3   0.24% 4   0.71% 5    -0.80%

 1946-2       0.52% 4   0.57% 5   0.34% 1   0.57% 2   1.13% 3     3.12%

 1950-2      -1.43% 2   0.23% 3   1.33% 4   1.09% 5   0.85% 1     2.07%

 1954-2       0.10% 1   0.59% 2   0.20% 3   0.36% 4   0.62% 5     1.87%

 1958-2       0.69% 5   0.38% 1  -0.40% 2   0.28% 3   0.21% 4     1.16%


 Avg         -0.03%     0.33%    -0.03%     0.50%     0.70%       1.48%


 1962-2       0.18% 3   0.55% 4   0.76% 5   1.10% 1   0.69% 2     3.28%

 1966-2      -1.85% 1  -0.16% 2   0.48% 3  -0.39% 4  -0.20% 5    -2.12%

 1970-2      -0.22% 1   0.15% 2   0.35% 3   0.04% 4  -0.03% 5     0.30%

 1974-2      -1.19% 4  -1.88% 5  -1.77% 1  -0.54% 2  -1.48% 3    -6.86%

 1978-2       0.74% 2   0.65% 3   0.46% 4   0.46% 5   0.68% 1     2.99%


 Avg         -0.47%    -0.14%     0.05%     0.13%    -0.07%      -0.48%


 1982-2      -0.73% 1  -0.84% 2  -1.55% 3  -0.01% 4  -0.58% 5    -3.72%

 1986-2       0.95% 5  -1.75% 1  -0.62% 2   0.87% 3  -0.20% 4    -0.75%

 1990-2       0.37% 3  -0.33% 4  -0.69% 5   0.60% 1   0.17% 2     0.11%

 1994-2       0.25% 1  -0.20% 2  -0.17% 3   0.37% 4   0.88% 5     1.14%

 1998-2       0.57% 1  -1.49% 2  -0.44% 3   1.57% 4  -1.94% 5    -1.73%


 Avg          0.28%    -0.92%    -0.70%     0.68%    -0.33%      -0.99%


 2002-2      -0.56% 4   1.69% 5   5.41% 1   0.42% 2   0.98% 3     7.94%

 2006-2       0.63% 2  -0.04% 3  -0.41% 4   1.22% 5  -0.15% 1     1.25%

 2010-2       1.16% 1  -0.10% 2  -0.69% 3  -0.42% 4   0.01% 5    -0.05%

 2014-2      -0.48% 5   0.03% 1  -0.45% 2   0.01% 3  -2.00% 4    -2.90%

 2018-2       0.91% 3  -0.30% 4  -0.66% 5  -0.58% 1   0.49% 2    -0.14%


 Avg          0.33%     0.25%     0.64%     0.13%    -0.13%       1.22%


SPX summary for PY2 1930-2018

Averages     -0.33%    -0.08%     0.11%     0.12%     0.09%      -0.10%

% Winners       57%       48%       43%       65%       65%         48%

MDD  7/26/1934  7.83% --  7/31/1974  6.68% --  7/27/1938  4.30%


SPX summary for all years 1928 - 2021

Averages     -0.03%     0.03%     0.09%     0.13%     0.04%       0.25%

% Winners       55%       57%       50%       60%       59%         55%

MDD 7/26/1934  7.83% --  7/31/1933  6.84% --  7/31/1974  6.68%

Conclusion

The market had a good week.  All of the major indices advanced while new lows declined to their lowest levels in months.

The strongest sectors last week were Electronics and Leisure, while the weakest were Energy and Precious Metals (for the 5th week in a row).

I expect the major averages to be lower on Friday, July 29, than they were on Friday, July 22.

Last week's negative forecast was a miss.

More By This Author:

Technical Market Report For Saturday, July 16
Technical Market Report For Saturday, July 9
Technical Market Report For Saturday, July 2