Technical Stock Market Report

The good news is:  The NASDAQ composite (OTC) closed at a multi year high Friday.

The negatives:  New highs declined last week and, on the NASDAQ, remain closer to their lows of the past 2 years than their highs.

The chart below covers the past 6 months showing the 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 1st trading day of each month.

OTC NH headed downward while the index hit a multi year high.

The next chart is similar to the one above except it shows the S&P 500 (SPX) in red and NY NH has been calculated from NYSE data.

NY NH has been stronger than OTC NH, but also remains well below its high of the past 2 years.

The positives:   The secondaries outperformed the blue chips last week and new lows remained insignificant.

The chart below covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.  Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the neutral 50% level.

NY HL Ratio held above 90%, closing at an extremely high 92%.

The next chart is similar to the one above except it shows the OTC in blue and OTC HL Ratio, in red, has been calculated from NASDAQ data.

OTC HL Ratio fell 10% last week as the index rose to a multi year high, but remains comfortably positive.

Conclusion:  In earlier times, during the 2nd year of the Presidential Cycle, the market was stronger in the coming week and the month of July, but for the past 40 years the coming week and the month of July have been weak.

I expect the major averages to be lower on Thursday July 3 than they were on Friday June 27.

Last week the secondaries were up a little while the blue chips were down a little so I am calling last weeks negative forecast a tie.

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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.