Technical Stock Market Report

The good news is:  In spite of lower prices, new lows declined at the end of the week.

The Negatives:  There was a spike in NYSE volume last Friday.  Banks and mining issues populated the most active list.

On the NASDAQ, new lows outnumbered new highs every day except Wednesday.  On the NYSE, new highs outnumbered new lows every day by substantial margins.

Market activity this month has been pretty consistent with the average seasonal pattern.

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.

OTC HL Ratio fell into negative territory last week.

The positives:  Everything was a little better on the NYSE.

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

NY HL Ratio took a hit last week, but closed Friday at a comfortable 82%.

Money Supply (M2) and Interest Rates

Gordon Harms provided the next two charts.

Money supply has been expanding at a rate well above its recent trend.

The yield curve continues to compress.

Conclusion

Last week’s market weakness occurred right on the seasonal schedule.

Next week seasonal activity has been modestly positive during the 4th year of the Presidential Cycle and modestly negative during the other years.

I expect the major averages to be higher on Friday June 24 than they were on Friday June 17.

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.