The good news is:
The S&P 500 (SPX) and the Dow Jones Industrial average (DJIA) both closed at all time highs on Friday.
The NegativesThe first chart covers the last 6 months showing the 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. NY NH made a recovery last week, but failed to confirm the index all time high on Friday. 
The PositivesThe next chart is similar to the 1st one except it shows the NASDAQ composite (OTC) in blue and OTC NH in green has been calculated with NASDAQ data. OTC NH made a nice recovery and could easily confirm a new high in the index; if it occurs. 
The next chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good). OTC NL moved sharply upward as NASDAQ new lows decreased significantly last week. 
The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.NY NL NYSE new lows remained at unthreatening levels. 
The next chart 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 50%, neutral level (equal numbers of new highs and new lows).OTC HL Ratio moved sharply upward last week. 
The next chart is similar to the one above except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data.NY HL ratio moved upward, finishing the week at a very strong 93%. 
SeasonalityNext week includes the 5 trading days prior to the 4th Friday of October during the 4th 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 2023 while SPX data runs from 1953 to 2023. There are summaries for both the 4th 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 negative by all measures. Report for the week before the 4th Friday of October.The number following the year is the position in the Presidential Cycle.Daily returns from Monday through the 4th Friday. OTC Presidential Year 4 (PY4) Year Mon Tue Wed Thur Fri Totals 1964-4 -0.43% 0.25% -0.18% -0.23% 0.44% -0.16% Avg -0.43% 0.25% -0.18% -0.23% 0.44% -0.16% 1968-4 0.71% -0.65% 0.00% -0.63% -0.76% -1.33% 1972-4 0.52% 0.19% -0.02% 0.37% 0.12% 1.19% 1976-4 0.45% -0.01% 0.20% -0.16% -0.26% 0.23% 1980-4 -0.05% -0.35% 0.73% -1.06% 0.18% -0.53% 1984-4 -0.25% 0.02% 0.09% -0.73% -0.65% -1.52% Avg 0.28% -0.16% 0.25% -0.44% -0.27% -0.39% 1988-4 -0.35% -0.29% -0.24% -0.89% 0.27% -1.50% 1992-4 1.38% 0.34% 0.75% -0.01% 0.03% 2.50% 1996-4 -0.49% -1.33% 0.65% -0.07% -0.36% -1.60% 2000-4 -0.41% -1.41% -5.56% 1.32% 0.19% -5.88% 2004-4 1.31% -0.70% 0.52% 1.07% -1.97% 0.23% Avg 0.29% -0.68% -0.78% 0.28% -0.37% -1.25% 2008-4 3.43% -4.14% -4.77% -0.73% -3.23% -9.45% 2012-4 0.38% -0.88% -0.29% 0.15% 0.06% -0.58% 2016-4 1.00% -0.50% -0.63% -0.65% -0.50% -1.28% 2020-4 -1.65% 0.33% -0.28% 0.19% 0.37% -1.05% OTC summary for PY4 1964 – 2020 Avg 0.37% -0.61% -0.64% -0.14% -0.40% -1.38% Win% 53% 33% 43% 33% 53% 27% OTC summary for all years 1953 – 2023 Avg 0.11% -0.35% -0.08% 0.00% 0.01% -0.31% Win% 56% 41% 48% 52% 56% 51%
SPX PY4 Year Mon Tue Wed Thur Fri Totals 1956-4 -0.02% -0.24% -0.41% -0.17% 0.92% 0.07% 1960-4 -1.16% -0.76% 1.43% 1.07% -0.39% 0.20% 1964-4 0.12% 0.29% -0.09% -0.19% 0.24% 0.37% 1968-4 0.16% -0.40% 0.00% -0.70% 0.35% -0.59% 1972-4 1.02% 0.42% -0.08% 0.24% -0.33% 1.26% 1976-4 0.61% -0.02% 0.29% -0.95% -0.80% -0.88% 1980-4 0.83% -0.58% 0.06% -1.81% 0.25% -1.26% Avg 0.55% -0.06% 0.04% -0.68% -0.06% -0.22% 1984-4 -0.36% -0.16% 0.07% -0.53% -0.61% -1.60% 1988-4 -0.49% 0.04% -0.35% -1.46% 0.45% -1.81% 1992-4 0.79% 0.12% 0.05% -0.19% -0.19% 0.58% 1996-4 -0.14% -0.46% 0.10% -0.70% -0.19% -1.40% 2000-4 -0.08% 0.17% -2.38% -0.03% 1.11% -1.21% Avg -0.05% -0.06% -0.50% -0.58% 0.11% -1.09% 2004-4 0.53% -0.97% 0.04% 0.26% -0.97% -1.12% 2008-4 4.77% -3.08% -6.10% 1.26% -3.45% -6.60% 2012-4 0.04% -1.44% -0.31% 0.30% -0.07% -1.48% 2016-4 0.47% -0.38% -0.17% -0.30% -0.31% -0.69% 2020-4 -1.63% 0.47% -0.22% 0.52% 0.34% -0.51% Avg 0.84% -1.08% -1.35% 0.41% -0.89% -2.08% SPX summary for PY4 1956 – 2020 Avg 0.32% -0.41% -0.51% -0.20% -0.22% -0.98% Win% 59% 35% 44% 35% 41% 29% SPX summary for all years 1953 – 2023 Avg -0.11% -0.06% 0.07% -0.09% 0.00% -0.19% Win% 58% 46% 53% 44% 49% 48%
ConclusionThe dilemma is: The breadth indicators have been sensationally strong while next week’s seasonality has been sensationally weak.The strongest sectors last week were Utilities (up from the bottom last week) and Precious Metals while the weakest were Energy (down from the top last week) and Electronics.I expect the major averages to be higher on Friday October 25 than they were on Friday October 18. More By This Author:Technical Market Report For Saturday, Oct. 5 Technical Market Report For September 28, 2024 Technical Market Report For September 21, 2024
