The good news is:

• The secondaries outperformed the blue chips again last week.

The Negatives

• New lows outnumbered new highs on both the NYSE and Nasdaq at the end of last week.

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 turned downward and has remained negative for over 6 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 dropped into deeply 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 Friday.  The actual numeric level was at 210 at the beginning of the week and finished the week at 171, a numeric improvement. But the indicator turned downward Friday. 

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 on Friday.

The Positives

Hard to find.

Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of June 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 1953 to 2021.  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 mostly negative.

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

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   0.51%   0.31%   0.20%  -0.02%   0.24%   1.24%

 1970-2  -1.41%   0.27%   1.66%   0.83%   1.46%   2.80%

 1974-2  -1.47%  -0.36%  -0.73%  -1.00%  -0.93%  -4.49%

 1978-2  -0.10%  -0.04%   0.22%  -0.26%  -0.40%  -0.58%

 1982-2  -0.81%  -0.56%   0.15%  -0.93%  -0.79%  -2.94%

 1986-2  -0.26%  -0.57%  -0.26%   0.29%   0.12%  -0.68%

 1990-2   0.42%   0.81%   0.49%  -0.38%   0.10%   1.45%

 1994-2  -0.35%   0.58%  -0.02%  -0.12%  -0.76%  -0.66%

 1998-2  -1.68%   2.17%   1.33%  -0.21%   0.49%   2.10%

 Avg     -0.54%   0.49%   0.34%  -0.27%  -0.17%  -0.15%

 2002-2   3.23%  -0.67%  -2.99%  -2.14%  -1.62%  -4.20%

 2006-2  -2.05%  -0.90%   0.65%   2.79%  -0.66%  -0.17%

 2010-2   0.02%   2.76%   0.00%   0.05%   0.11%   2.95%

 2014-2   0.24%   0.37%   0.59%  -0.08%   0.20%   1.33%

 2018-2   0.19%   0.57%  -0.11%   0.85%  -0.19%   1.32%

 Avg      0.33%   0.43%  -0.37%   0.29%  -0.43%   0.24%

OTC summary for PY2 1966 - 2018 

 Avg     -0.25%   0.34%   0.09%  -0.02%  -0.19%  -0.04%

 Win%       43%     57%     64%     36%     50%     50%

OTC summary for all years 1963 - 2021

 Avg     -0.14%   0.18%   0.01%   0.02%  -0.03%   0.04%

 Win%       46%     61%     60%     51%     53%     53%

SPX PY2

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1954-2   0.14%   0.73%   0.73%  -0.28%   0.28%   1.60%

 1958-2   0.36%  -0.53%   0.89%  -1.61%   0.54%  -0.36%

 1962-2  -1.08%  -2.56%  -1.49%  -2.11%   2.87%  -4.37%

 1966-2   0.45%   0.28%  -0.39%  -0.30%   0.05%   0.08%

 1970-2   0.23%   2.38%  -0.20%   0.67%   0.71%   3.79%

 1974-2  -1.38%  -0.66%  -0.68%  -0.71%  -0.85%  -4.28%

 1978-2  -0.38%   0.02%  -0.09%  -1.15%  -0.94%  -2.53%

 Avg     -0.43%  -0.11%  -0.57%  -0.72%   0.37%  -1.46%

 1982-2  -1.15%  -0.25%  -0.75%  -1.17%  -0.30%  -3.61%

 1986-2   0.16%  -0.72%   0.26%  -0.38%   1.44%   0.76%

 1990-2   0.81%   1.28%  -0.37%  -0.55%   0.00%   1.18%

 1994-2   0.09%   0.71%  -0.38%   0.29%  -0.75%  -0.04%

 1998-2  -1.98%   0.98%   1.79%  -0.06%  -0.52%   0.21%

 Avg     -0.41%   0.40%   0.11%  -0.37%  -0.03%  -0.30%

 2002-2   2.87%   0.09%  -1.65%  -1.34%  -1.70%  -1.74%

 2006-2  -1.27%  -1.03%   0.52%   2.12%  -0.37%  -0.02%

 2010-2  -0.18%   2.35%  -0.06%   0.13%   0.13%   2.37%

 2014-2   0.08%   0.22%   0.77%   0.13%   0.17%   1.37%

 2018-2   0.11%   0.17%  -0.40%   0.25%  -0.10%   0.02%

 Avg      0.32%   0.36%  -0.16%   0.26%  -0.37%   0.40%

SPX summary for PY2 1954 - 2018 

 Avg     -0.12%   0.20%  -0.09%  -0.36%   0.04%  -0.33%

 Win%       59%     65%     35%     35%     53%     53%

SPX summary for all years 1953 - 2021

 Avg     -0.06%   0.19%  -0.02%  -0.11%  -0.04%  -0.05%

 Win%       58%     58%     46%     49%     55%     55%

Conclusion

The market had a bad week and the breadth indicators all went negative.

The strongest sectors last week were Energy and Precious metals while the weakest were Banks and Electronics.

I expect the major averages to be lower on Friday, June 17, than they were on Friday, June 10.