Conclusion
The market had a good week except the blue chips outperformed the secondaries.  If that pattern continues we could be setting up for a top.

I expect the major averages to be higher on Friday March 22 than they were on Friday March 15.

Good Luck,
Mike Burk
YTD W 7 / L 1 / T 2

The next chart is similar to the one above, except, it shows the SPX in red and NY NH, in green has been calculated with NYSE data.

NY NH did confirm the short term high for the SPX.

Money supply (M2) and Interest Rates
The following charts were supplied by Gordon Harms.M2 growth continued to decline last month and is now down to its long term trend line.

The next chart 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.

OTC NH turned upward, although looking at just the past several weeks, OTC NH is failing to confirm the recent OTC price high.

Interest rates at the close Friday and their change from last month.
2yr yield 2.438% down from 2.520%
5yr yield 2.393% down from 2.491%
10yr yield 2.592% down from  2.666%
30yr yield 3.014% up from 2.994%
All of the rates except the 30yr declined last month while the inversion between the 2yr and 5yr continued.

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 also recovered last week, finishing the week at a strong 84%.  There is also a non confirmation here, but, at 84% it is not of much concern.

​​​​​The Positives

The breadth indicators all moved upward last week.

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 recovered nicely last week, finishing at a comfortable 68%. There is a short term non confirmation.  About 3 weeks ago the prices were lower than they are now while OTC HL Ratio was higher.  That should work itself out over the next few weeks. 

Seasonality
Next week includes the 5 trading days prior to the 4th Friday of March during the 3rd 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 2018 while SPX data runs from 1953 to 2018.  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.

An observant reader pointed out that Friday March 15 was not Good Friday as I had declared last week (I cannot imagine how I made that mistake).

Returns for the coming week have been mixed and stronger during the 3rd year of the Presidential Cycle than other years.

Technical market report for March 16, 2019.

The good news is:  The breadth indicators all strengthened last week.


The Negatives

Although positive, NASDAQ breadth indicators have been weaker than NYSE breadth indicators and, for the last 2 weeks, the Russell 2000 (R2K) has been weaker than the S&P 500 (SPX).

Report for the week before the 4th Friday of March.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.

OTC Presidential Year 3 (PY3)
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1963-3   0.39%  -0.29%  -0.13%   0.35%   0.06%   0.39%
 1967-3   0.66%   0.16%   0.69%   0.20%   0.32%   2.04%
 1971-3  -0.38%  -0.25%  -0.39%  -0.10%   0.45%  -0.66%
 1975-3   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 1979-3   0.46%  -0.27%   0.50%   0.49%   0.38%   1.57%
 1983-3   0.50%   0.45%   0.65%   0.41%   0.19%   2.20%
 1987-3  -0.36%   0.02%  -0.15%   0.28%  -0.42%  -0.63%
 1991-3   0.00%  -0.74%   0.71%  -0.32%  -0.10%  -0.45%
 1995-3   0.27%  -0.09%  -0.08%   0.28%   0.90%   1.27%

 Avg      0.17%  -0.13%   0.33%   0.23%   0.19%   0.79%

 1999-3  -1.06%  -3.05%   1.83%   2.94%  -0.64%   0.02%
 2003-3  -3.66%   1.55%  -0.26%  -0.23%  -1.06%  -3.66%
 2007-3   0.92%   0.58%   1.98%  -0.17%  -0.11%   3.19%
 2011-3   1.83%  -0.31%   0.54%   1.41%   0.24%   3.72%
 2015-3  -0.31%  -0.32%  -2.37%  -0.27%   0.57%  -2.70%

 Avg     -0.46%  -0.31%   0.35%   0.74%  -0.20%   0.12%

 OTC summary for PY3 1963 - 2015
 Avg     -0.06%  -0.20%   0.27%   0.41%   0.06%   0.48%
 Win%       54%     38%     54%     62%     62%     62%

OTC summary for all years 1963 - 2018
 Avg     -0.03%  -0.23%   0.08%   0.11%   0.00%  -0.08%
 Win%       50%     42%     52%     52%     54%     54%


SPX PY3
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1955-3  -0.64%   0.61%   1.30%   0.79%   0.08%   2.15%

 1959-3   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
 1963-3  -0.49%  -0.21%   0.73%  -0.15%   0.52%   0.40%
 1967-3  -0.08%   0.04%  -0.20%  -0.03%  -0.55%  -0.82%
 1971-3  -0.39%  -0.34%  -0.66%  -0.01%   0.34%  -1.05%
 1975-3   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%

 Avg     -0.32%  -0.17%  -0.04%  -0.06%   0.10%  -0.49%

 1979-3   0.37%  -0.55%   0.75%   0.41%  -0.07%   0.91%
 1983-3   0.86%  -0.35%   1.43%   0.37%  -0.46%   1.85%
 1987-3   1.00%   0.16%  -0.42%   0.18%  -1.60%  -0.67%
 1991-3  -0.40%  -1.48%   0.36%  -0.36%   0.25%  -1.64%
 1995-3   0.13%  -0.22%   0.12%   0.06%   1.01%   1.10%

 Avg      0.39%  -0.49%   0.45%   0.13%  -0.17%   0.31%

 1999-3  -0.18%  -2.69%   0.52%   1.69%  -0.56%  -1.22%
 2003-3  -3.52%   1.22%  -0.55%  -0.16%  -0.58%  -3.60%
 2007-3   1.09%   0.63%   1.71%  -0.03%   0.11%   3.51%
 2011-3   1.50%  -0.36%   0.29%   0.93%   0.32%   2.69%
 2015-3  -0.17%  -0.61%  -1.46%  -0.24%   0.24%  -2.25%

 Avg     -0.26%  -0.36%   0.10%   0.44%  -0.09%  -0.17%

SPX summary for PY3 1955 - 2015 
 Avg     -0.07%  -0.30%   0.28%   0.25%  -0.07%   0.10%
 Win%       43%     36%     64%     50%     57%     50%

SPX summary for all years 1953 - 2018
 Avg      0.03%  -0.14%   0.06%  -0.07%  -0.10%  -0.21%
 Win%       40%     46%     44%     39%     53%     37%