The good news is:
• New lows have remained at insignificant levels.
The negatives
The new high list expands in a strong market. Most of the major indices are within 1% of their all time highs and the new high list looks anemic.
The chart below 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.
The SPX was up to within 0.7% of its all time high while NY NH was flat.
The next chart is similar to the one above except is shows the NASDAQ composite (OTC) in blue and OTC NH has been calculated from NASDAQ data.
The OTC finished the week 0.6% of its recent multi year high and within 2% of its all time high while OTC NH fell.
The positives
New lows remained at insignificant levels last week.
The chart below 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 neutral 50% level for the indicator.
OTC HL Ratio rose to a very strong 78% on Friday.
The next chart is similar to the one above except is shows the SPX in red and NY HL Ratio, in blue, has been calculated with NYSE data.
NY HL Ratio finished the week at a very strong 95%.
Seasonality
Next week includes the 5 trading days prior to the 3rd Friday of April during the 3rd year of the Presidential Cycle.
The tables below show the daily change, on a percentage basis for the 5 trading days prior to the 3rd Friday of April during the 3rd year of the Presidential Cycle.
OTC data covers the period from 1963 to 2014 while SPX data runs from 1953 through 2014. There are summaries for both the 3rd 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 strong by all measures.
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 3 | ||||||
| Year | Mon | Tue | Wed | Thur | Fri | Totals |
| 1963-3 | 0.56% | 0.31% | 0.34% | 0.30% | 0.30% | 1.81% |
| 1967-3 | 0.40% | 0.57% | 1.23% | 0.31% | 0.49% | 3.01% |
| 1971-3 | 0.18% | -0.57% | -0.01% | 0.43% | 0.64% | 0.67% |
| 1975-3 | 1.34% | 0.23% | 0.63% | 0.33% | -0.23% | 2.30% |
| 1979-3 | 0.15% | 0.31% | 0.36% | -0.10% | -0.20% | 0.52% |
| 1983-3 | 0.44% | -0.34% | 1.05% | 0.71% | 0.60% | 2.45% |
| 1987-3 | -0.41% | 0.20% | -0.10% | -0.17% | -1.15% | -1.64% |
| 1991-3 | -0.16% | 1.18% | 0.90% | -0.92% | -1.07% | -0.06% |
| Avg | 0.27% | 0.32% | 0.57% | -0.03% | -0.41% | 0.72% |
| 1995-3 | 0.66% | 0.29% | 0.68% | 0.48% | 0.36% | 2.47% |
| 1999-3 | -5.57% | 2.73% | 3.26% | 2.92% | 1.16% | 4.50% |
| 2003-3 | -0.08% | 1.89% | 1.02% | -0.61% | -1.56% | 0.67% |
| 2007-3 | -0.11% | 0.03% | 0.92% | 0.26% | 0.11% | 1.22% |
| 2011-3 | -0.32% | -0.96% | 0.61% | -0.05% | 0.16% | -0.56% |
| Avg | -1.08% | 0.80% | 1.30% | 0.60% | 0.05% | 1.66% |
| OTC summary for Presidential Year 3 1963 - 2011 | ||||||
| Avg | -0.22% | 0.45% | 0.84% | 0.30% | -0.03% | 1.34% |
| Win% | 54% | 77% | 85% | 62% | 62% | 77% |
| OTC summary for all years 1963 - 2014 | ||||||
| Avg | -0.42% | 0.31% | 0.25% | 0.26% | 0.14% | 0.53% |
| Win% | 45% | 57% | 69% | 63% | 63% | 67% |
| SPX Presidential Year 3 | ||||||
| Year | Mon | Tue | Wed | Thur | Fri | Totals |
| 1955-3 | 0.82% | -0.13% | 0.16% | 0.10% | -0.81% | 0.14% |
| 1959-3 | 0.37% | 0.50% | 0.44% | 0.83% | 0.85% | 2.99% |
| 1963-3 | 0.10% | 0.33% | 0.27% | 0.06% | -0.09% | 0.68% |
| 1967-3 | 0.71% | 0.87% | 0.09% | 0.18% | 0.21% | 2.05% |
| 1971-3 | 0.50% | -0.38% | -0.24% | 0.19% | 0.47% | 0.54% |
| Avg | 0.50% | 0.24% | 0.14% | 0.27% | 0.13% | 1.28% |
| 1975-3 | 1.69% | 0.82% | 0.35% | 0.75% | -1.09% | 2.51% |
| 1979-3 | 0.34% | 0.62% | 0.29% | -0.48% | -0.21% | 0.57% |
| 1983-3 | 0.62% | -0.64% | 1.26% | -0.41% | 0.23% | 1.06% |
| 1987-3 | -0.29% | 2.44% | -2.01% | -0.13% | -1.85% | -1.83% |
| 1991-3 | 0.21% | 1.69% | 0.73% | -0.51% | -1.10% | 1.02% |
| Avg | 0.51% | 0.98% | 0.13% | -0.16% | -0.80% | 0.67% |
| 1995-3 | 0.87% | -0.14% | 0.10% | 0.17% | 0.23% | 1.22% |
| 1999-3 | -2.24% | 1.30% | 2.29% | 1.70% | -0.14% | 2.91% |
| 2003-3 | -0.18% | 2.17% | 0.84% | -0.83% | -1.38% | 0.62% |
| 2007-3 | -0.23% | -0.04% | 1.01% | -0.08% | -0.01% | 0.66% |
| 2011-3 | -0.28% | -0.78% | 0.02% | 0.01% | 0.39% | -0.64% |
| Avg | -0.41% | 0.50% | 0.85% | 0.20% | -0.18% | 0.95% |
| SPX sumamry for Presidential Year 3 1955 - 2011 | ||||||
| Avg | 0.20% | 0.57% | 0.37% | 0.10% | -0.29% | 0.97% |
| Win% | 67% | 60% | 87% | 60% | 40% | 87% |
| SPX summary for all years 1953 - 2014 | ||||||
| Avg | -0.16% | 0.30% | 0.07% | 0.11% | -0.03% | 0.29% |
| Win% | 47% | 55% | 57% | 63% | 50% | 65% |
Money supply (M2)
The money supply chart was provided by Gordon Harms. Money supply growth tumbled last week.
Conclusion
Leadership continues to narrow while we are in the strongest period of the Presidential Cycle.
I expect the major averages to be higher on Friday April 17 than they were on Thursday April 10.
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Good Luck,
YTD W 6 / L 5 / T 3
