Technical Market Report For Saturday, June 26

Technical Market Report for Saturday, June 26, 2021

The good news is that the Nasdaq composite (OTC) closed at all-time highs last Thursday and the S&P 500 (SPX) closed at an all-time high last Friday.

The Negatives

New highs continued to deteriorate, indicating narrowing leadership, while index prices hit new highs.

The first chart covers the past six months, showing the Nasdaq composite (OTC) in blue and a 10% trend (19-day EMA) of Nasdaq new highs (OTC NH) in green. Dashed vertical lines have been drawn on the first trading day of each month. The OTC NH failed to confirm the all-time high by a wide margin.

The next chart is similar to the first one, except it shows the SPX in red and the NY NH in green. The information has been calculated with NYSE data. Similar action is seen in the NY NH and SPX.

The Positives

The number of new lows remained non-threatening. The next chart covers the past six months, showing the OTC in blue, and a 40% trend (four-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.

The OTC HL Ratio finished the week at a strong 86%.

The next chart is similar to the one above, except it shows the SPX in red and the NY HL ratio in blue. The information has been calculated with NYSE data. The NY HL Ratio finished the week at a very strong 94%. 

Seasonality

Next week includes the last three trading days of June and the first two trading days of July, all 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.

OTC Presidential Year 1 (PY1)

    Year          Mon        Tues         Wed        Thurs        Fri      Totals

 1965-1      -0.45% 1  -2.13% 2   0.80% 3   1.80% 4   0.73% 5     0.76%

 1969-1       0.09% 4   0.23% 5   1.20% 1   0.60% 2   0.60% 3     2.73%

 1973-1       0.26% 3   0.94% 4  -0.18% 5  -0.82% 1  -0.70% 2    -0.50%

 1977-1      -0.35% 2   0.06% 3   0.39% 4   0.17% 5   0.22% 2     0.49%

 1981-1       0.21% 5  -0.70% 1  -1.13% 2  -0.52% 3  -0.85% 4    -3.00%

 1985-1       0.38% 3   0.66% 4   0.29% 5   0.09% 1   0.15% 2     1.57%

 1989-1      -0.81% 3  -1.57% 4  -0.60% 5   0.16% 1   0.22% 3    -2.60%

 1993-1       1.16% 1  -0.25% 2   0.41% 3  -0.05% 4   0.13% 5     1.39%

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