Report for the week before the 3rd Friday of July.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.

OTC Presidential Year 3 (PY3)
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1963-3  -0.21%  -0.32%  -0.32%  -0.59%  -0.39%  -1.83%
 1967-3  -0.03%  -0.14%   0.92%   0.19%   0.18%   1.12%
 1971-3   0.30%  -0.43%  -0.38%   0.34%  -0.67%  -0.84%
 1975-3  -0.29%  -1.21%  -1.28%  -0.57%  -0.64%  -3.99%

 1979-3   0.27%  -0.74%  -0.44%   0.23%   0.30%  -0.39%
 1983-3   0.13%  -0.96%  -0.74%   0.29%  -0.83%  -2.11%
 1987-3  -0.59%  -0.50%  -0.02%  -0.39%   0.35%  -1.14%
 1991-3   0.71%  -0.52%  -0.04%   0.69%   0.15%   0.98%
 1995-3   0.60%  -1.44%  -4.15%   1.14%   0.12%  -3.72%

 Avg      0.22%  -0.83%  -1.07%   0.39%   0.02%  -1.28%

 1999-3  -0.10%  -0.44%   1.44%   0.76%   0.88%   2.54%
 2003-3  -1.59%   1.47%   0.77%  -1.03%   1.72%   1.34%
 2007-3  -0.36%   0.55%  -0.47%   0.76%  -1.19%  -0.71%
 2011-3  -2.00%  -0.74%   0.54%  -1.22%   0.98%  -2.44%
 2015-3   0.17%  -0.21%  -0.70%  -0.49%  -1.12%  -2.35%

 Avg     -0.77%   0.13%   0.31%  -0.25%   0.25%  -0.32%

OTC summary for PY3 1963 - 2015
 Avg     -0.21%  -0.40%  -0.35%   0.01%  -0.01%  -0.97%
 Win%       43%     14%     29%     57%     57%     29%

OTC summary for all years 1963 - 2018
 Avg     -0.10%  -0.08%   0.04%   0.03%  -0.19%  -0.30%
 Win%       56%     41%     51%     56%     43%     45%


SPX PY3
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1955-3   0.26%   0.00%  -1.19%   0.02%   0.36%  -0.56%

 1959-3  -0.47%   0.85%   0.34%   0.10%  -0.03%   0.78%
 1963-3  -0.63%  -0.09%  -0.30%  -0.64%  -0.20%  -1.86%
 1967-3   0.01%   0.81%   0.16%   0.21%   0.20%   1.40%
 1971-3   0.13%  -1.31%  -0.28%   0.06%  -0.17%  -1.57%
 1975-3  -0.82%  -1.07%  -1.39%  -0.12%  -0.87%  -4.26%

 Avg     -0.36%  -0.16%  -0.30%  -0.08%  -0.21%  -1.11%

 1979-3   0.41%  -0.89%  -0.14%  -0.08%   0.21%  -0.48%
 1983-3   0.62%  -1.53%  -0.04%   0.33%  -1.04%  -1.66%
 1987-3  -1.02%  -0.91%  -0.03%  -0.21%   0.47%  -1.69%
 1991-3   0.56%  -0.22%  -0.09%   1.10%  -0.30%   1.05%
 1995-3   0.51%  -0.76%  -1.34%   0.46%   0.01%  -1.11%

 Avg      0.22%  -0.86%  -0.33%   0.32%  -0.13%  -0.78%

 1999-3  -0.30%  -0.39%   0.33%   0.82%   0.65%   1.11%
 2003-3  -1.46%   0.95%   0.05%  -0.71%   1.74%   0.57%
 2007-3  -0.19%  -0.01%  -0.21%   0.45%  -1.22%  -1.18%
 2011-3  -1.81%  -0.44%   0.31%  -0.67%   0.56%  -2.06%
 2015-3   0.08%  -0.43%  -0.24%  -0.57%  -1.07%  -2.23%

 Avg     -0.74%  -0.06%   0.05%  -0.14%   0.13%  -0.76%

SPX summary for PY3 1955 - 2015 
 Avg     -0.26%  -0.36%  -0.25%   0.03%  -0.04%  -0.86%
 Win%       50%     20%     31%     56%     50%     31%

SPX summary for all years 1953 - 2018
 Avg     -0.11%  -0.18%   0.04%  -0.01%  -0.12%  -0.37%
 Win%       47%     35%     54%     57%     47%     42%

Conclusion
The minor non confirmations continued, but there are no serious threats.  Seasonality for the coming week is extremely weak.

I expect the major averages to be lower on Friday July 19 than they were on Friday July 12. 


Last week the R2K was down a little while the rest of the major indices closed at all time highs so I am calling last weeks positive forecast a tie.

Good Luck,
Mike Burk
YTD W 11 / L 8 / T 8

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 declined slightly to finish the week at a very strong 85%.  

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

OTC NH confirmed the all time high for the index.  The implications are higher highs for the index.

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green.

NY NH again failed to confirm the SPX all time high, but was close enough not to be worrisome.

Interest rates at their close last Friday and their changes from last month.
2yr yield 1.625% down from 1.762%
5yr yield 1.873% up from 1.784%
10yr yield 2.124% up from 2.058%
30yr yield 2.649% up from 2.586%

Seasonality
Next week includes the 5 trading days prior to the 3rd Friday of July 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.

Average returns for the coming week have been negative by all measures.  

Money supply (M2) and Interest Rates
The following charts were supplied by Gordon Harms.
M2 growth has been soaring.

​​​​​The Positives

New lows remained at non threatening 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.

OTC HL Ratio rose slightly to finish the week at a comfortable 70%.

Technical market report for July 13, 2019.

The good news is: The Dow Jones Industrial Average, S&P 500 (SPX) and NASDAQ composite (OTC) all closed at all time highs last Friday.


The Negatives

The all time highs for the blue chip indices were not confirmed by the secondaries.  The Russell 2000 (R2K) is 8.8% off its all time high and was down for the week.

The first chart is from Fasttrack (https://investorsfasttrack.com/), it covers the past year showing the SPX in green, the R2K in red and a relative strength indicator called Accutrack as a histogram in yellow.  Dashed vertical lines have been drawn on the 1st trading day of each month.

 Accutrack is above the neutral line when the R2K out performing the SPX. It has been underperforming the SPX since early March.