Technical Stock Market Report

The good news is:  The market turned sharply upward last week.  New lows declined sharply on both the NYSE and NASDAQ and the secondaries were stronger than the blue chips.

The Negatives:  As far as new highs and new lows are concerned, the NASDAQ and NYSE have been out of synch for quite a while.  Last week new lows declined on both exchanges while new highs picked up on the NASDAQ but were a bit weaker on the NYSE.

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 in green.  Dashed vertical lines have been drawn on the 1st trading day of each month.

NY NH continued falling in spite of the sharp rally in the SPX.

The positives:  New lows all but disappeared last week.

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

OTC NH turned sharply upward last week.

The next chart shows 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 reversed itself moving to comfortably positive territory.

The chart below is similar to the one above except it shows the SPX in red and NY HL Ratio, in blue, has been calculated from NYSE data.

NY HL Ratio went from sharply falling the week before to sharply rising last week.

Seasonality

Next week includes the last trading day of May and the 1st 3 trading days of June during the 4th year of the Presidential Cycle.  The tables below show the daily change, on a percentage basis for that period.

Conclusion

The market made a sharp turn upward last week.

I expect the major averages to be higher on Friday June 3 than they were on Friday May 27.

Last week’s negative forecast was a miss.

Disclaimer:  Charts and figures presented herein are believed to be reliable but I cannot attest to their accuracy.  Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus and the Wall Street Journal (wsj.com).  Historical data is from Barron’s and ISI price books.  The views expressed dare provided for information purposes only and should not be construed in any way as investment advice.  Furthermore, the opinions expressed may change without notice.