The good news is:
The Dow Jones Industrial Average (DJIA) closed at an all-time high last Friday. 

The Negatives
The secondaries underperformed the blue chips last week and, not surprisingly, new lows increased and new highs decreased.
New lows reached uncomfortable, but not threatening levels.

The first chart covers the past 6 months showing the Nasdaq composite (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 tumbled along with the index.

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

NY NH continued its fall.

The Positives

New highs outnumbered new lows every day last week except Thursday.

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 finished the week on the plus side at 59%.

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

NY HL Ratio fell last week, but finished the week at a comfortable 69%.

Seasonality

Next week includes the 5 trading days prior to the 4th Friday of June during the 1st 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 2016 while SPX data runs from 1953 to 2016. There are summaries for both the 1st 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 mixed and a little stronger during the 1st year of the Presidential Cycle than average.

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

OTC Presidential Year  1
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1965-1  -0.50%  -0.11%  -0.11%  -0.78%  -1.51%  -3.01%
 1969-1  -0.66%   0.09%  -0.03%   0.09%   0.23%  -0.29%
 1973-1  -1.46%   0.19%  -0.76%   0.21%   0.59%  -1.23%

 1977-1   0.11%   0.11%  -0.05%   0.39%   0.49%   1.06%
 1981-1  -0.44%   0.29%  -0.21%   0.25%   0.21%   0.09%
 1985-1   0.44%   0.80%   0.38%   0.66%   0.29%   2.57%
 1989-1  -0.25%  -0.34%  -0.16%   0.33%   0.68%   0.26%
 1993-1  -0.12%  -0.29%  -0.29%   0.57%   0.88%   0.76%

 Avg     -0.05%   0.12%  -0.07%   0.44%   0.51%   0.95%

 1997-1  -0.88%   1.26%  -0.43%  -0.68%   0.13%  -0.60%
 2001-1  -1.96%   0.21%   1.93%   1.36%  -1.17%   0.37%
 2005-1  -0.09%   0.14%   0.05%  -1.02%  -0.84%  -1.77%
 2009-1  -3.35%  -0.07%   1.55%   2.08%   0.47%   0.68%
 2013-1  -1.09%   0.82%   0.85%   0.76%   0.04%   1.38%

 Avg     -1.48%   0.47%   0.79%   0.50%  -0.27%   0.01%

OTC summary for Presidential Year 1 1965 - 2013 
 Avg     -0.79%   0.24%   0.21%   0.32%   0.04%   0.02%
 Win%       15%     69%     38%     77%     77%     62%

OTC summary for all years 1963 - 2016
 Avg     -0.13%   0.07%   0.11%  -0.06%  -0.17%  -0.19%
 Win%       43%     62%     52%     58%     53%     51%


SPX Presidential Year  1
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1953-1   0.50%   0.67%  -0.12%   0.42%   0.08%   1.54%

 1957-1  -0.78%   0.79%  -0.13%   0.36%   0.23%   0.47%
 1961-1  -0.92%   0.88%  -0.02%  -0.37%   0.40%  -0.02%
 1965-1  -0.34%   0.19%  -0.63%  -1.31%  -0.60%  -2.69%
 1969-1  -0.46%   1.13%  -0.32%   0.25%   0.08%   0.69%
 1973-1  -1.43%   0.38%   0.43%  -1.18%   0.47%  -1.32%

 Avg     -0.79%   0.67%  -0.13%  -0.45%   0.12%  -0.58%

 1977-1   0.45%   0.32%  -0.28%   0.16%   0.57%   1.22%
 1981-1  -0.24%   1.06%  -0.52%   0.11%  -0.19%   0.23%
 1985-1  -0.24%   0.31%   0.17%   0.62%   0.32%   1.18%
 1989-1   0.17%  -0.20%  -0.24%   0.57%   1.76%   2.07%
 1993-1   0.57%  -0.06%  -0.61%   0.77%   0.22%   0.89%

 Avg      0.14%   0.29%  -0.30%   0.45%   0.54%   1.11%

 1997-1  -2.23%   2.02%  -0.82%  -0.60%   0.41%  -1.23%
 2001-1  -0.49%   0.34%   0.87%   1.14%  -0.95%   0.92%
 2005-1  -0.07%  -0.20%   0.02%  -1.08%  -0.76%  -2.10%
 2009-1  -3.06%   0.23%   0.65%   2.14%  -0.15%  -0.18%
 2013-1  -1.21%   0.95%   0.96%   0.62%  -0.43%   0.89%

 Avg     -1.41%   0.67%   0.34%   0.44%  -0.37%  -0.34%

SPX summary for Presidential Year 1 1953 - 2013 
 Avg     -0.61%   0.55%  -0.04%   0.16%   0.09%   0.16%
 Win%       25%     81%     38%     69%     63%     63%

SPX summary for all years 1953 - 2016
 Avg     -0.19%   0.14%   0.05%  -0.06%  -0.20%  -0.25%
 Win%       40%     57%     52%     51%     43%     49%

Money supply (M2) and Interest Rates

The following charts were supplied by Gordon Harms.

M2 growth declined a bit last month.

Short term rates have been rising while longer term rates have been falling.

The yield curve is not negative, but it is compressing.

Conclusion

The market has been doing a pretty good job of following the seasonal pattern for the 1st year of the Presidential Cycle. The seasonal pattern for the coming week reveals summer doldrums.

I expect the major averages to be lower on Friday, June 23 than they were on Friday, June 16.

Last week the DJIA and SPX were up while the OTC & Russell 2000 were down, so I am calling last weeks negative forecast a tie.