The good news is:
New lows disappeared last week.

The Negatives

The market is a little overbought.

In spite of a strong rally for prices, new highs did not increase significantly.

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 continued falling while prices were recovering.

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

NY NH also continued to decline. 

The Positives

New lows decline sharply at bottoms and that is what we saw last week.

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue.  NY NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good).

New lows disappeared last week and NY NL began moving sharply upward.

The next chart is similar to the one above except it shows the OTC in blue and OTC NL, in brown, has been calculated using Nasdaq data.

OTC NL is also turned sharply upward.

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 recovered to a positive 56%.

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 also made it into positive territory, finishing the week at 52%. 

Seasonality

Next week includes 4 trading days prior to the 4th Friday of February during the 2nd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for the 5 days prior to the 4th Friday. The market will be closed Monday in observance of Presidents Day.

OTC data covers the period from 1963 to 2016 while SPX data runs from 1953 to 2016. There are summaries for both the 2nd 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 insignificant.

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

OTC Presidential Year 2
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1966-2   0.97%   0.00%   0.03%  -0.35%  -0.40%   0.26%
 1970-2   0.00%  -0.31%  -0.05%   0.82%  -0.16%   0.30%
 1974-2   0.00%  -0.18%   0.81%   0.67%   0.82%   2.13%

 1978-2   0.00%  -0.25%   0.14%   0.03%   0.53%   0.44%
 1982-2  -0.87%  -0.88%   0.61%   0.48%  -0.01%  -0.67%
 1986-2  -0.04%  -0.17%   0.11%   0.94%   0.26%   1.09%
 1990-2   0.00%  -1.21%  -0.55%   0.29%  -0.76%  -2.22%
 1994-2   0.00%   0.29%  -0.26%  -1.23%   0.56%  -0.63%

 Avg     -0.46%  -0.44%   0.01%   0.10%   0.12%  -0.40%

 1998-2   1.37%  -0.75%   1.60%   0.60%  -0.37%   2.45%
 2002-2   0.00%  -3.02%   1.43%  -3.34%   0.48%  -4.46%
 2006-2   0.00%  -0.85%   0.89%  -0.17%   0.34%   0.21%
 2010-2  -0.08%  -1.28%   1.01%  -0.08%   0.18%  -0.24%
 2014-2   0.69%  -0.13%   0.10%   0.63%  -0.25%   1.05%

 Avg      0.66%  -1.20%   1.01%  -0.47%   0.08%  -0.20%

OTC summary for Presidential Year 2 1966 - 2014 
 Avg      0.34%  -0.73%   0.45%  -0.05%   0.09%  -0.02%
 Win%       50%     08%     77%     62%     54%     62%

OTC summary for all years 1963 - 2017
 Avg     -0.14%  -0.29%   0.18%   0.06%   0.10%  -0.02%
 Win%       48%     39%     63%     63%     56%     60%


SPX Presidential Year 2
 Year       Mon     Tue     Wed    Thur    Fri    Totals
 1954-2   0.00%  -0.35%   0.00%   0.31%   0.93%   0.89%

 1958-2  -0.56%  -0.10%   0.76%  -0.59%   0.39%  -0.09%
 1962-2  -0.25%   0.36%  -0.48%   0.00%  -0.23%  -0.61%
 1966-2  -0.58%   0.00%  -0.42%  -0.64%   0.28%  -1.38%
 1970-2   0.00%  -0.05%   1.55%  -0.50%   0.67%   1.67%
 1974-2   0.00%  -0.16%   1.43%   1.36%   0.72%   3.35%

 Avg     -0.47%   0.01%   0.57%  -0.09%   0.37%   0.59%

 1978-2   0.00%  -0.42%  -0.03%   0.09%   0.97%   0.61%
 1982-2  -1.44%  -0.07%   1.76%  -0.23%  -0.09%  -0.07%
 1986-2  -0.12%  -0.25%   0.11%   1.22%   0.07%   1.03%
 1990-2   0.00%  -1.42%  -0.10%  -0.60%  -0.48%  -2.60%
 1994-2   0.00%   0.81%  -0.16%  -1.37%   0.39%  -0.33%

 Avg     -0.78%  -0.27%   0.31%  -0.18%   0.17%  -0.27%

 1998-2   0.38%  -0.72%   1.19%   0.56%   0.06%   1.46%
 2002-2   0.00%  -1.89%   1.35%  -1.55%   0.82%  -1.26%
 2006-2   0.00%  -0.33%   0.75%  -0.38%   0.13%   0.17%
 2010-2  -0.10%  -1.21%   0.97%  -0.21%   0.14%  -0.41%
 2014-2   0.62%  -0.13%   0.00%   0.49%   0.28%   1.26%

 Avg      0.30%  -0.86%   0.85%  -0.22%   0.29%   0.24%

SPX summary for Presidential Year 2 1954 - 2014 
 Avg     -0.26%  -0.40%   0.58%  -0.14%   0.32%   0.23%
 Win%       25%     13%     67%     40%     81%     50%

SPX summary for all years 1953 - 2017
 Avg     -0.15%  -0.17%   0.15%  -0.05%   0.09%  -0.05%
 Win%       39%     43%     51%     47%     61%     48%

Conclusion

Last week the market bounced from its oversold condition.
New lows disappeared, but new highs did not expand significantly.
Seasonally next week has been insignificant.

I expect the major averages to be higher on Friday February 23 than they were on Friday February 16.