Technical Market Report For Saturday, Dec. 25

Technical Market Report for Saturday, Dec. 25, 2021

The good news is that the Santa Clause rally appeared on schedule and the S&P 500 (SPX) closed at an all-time high on the last trading day before Christmas.

The Negatives

New highs maintained their low levels while new lows maintained their high levels again last week. 

The first chart covers the past six months, showing the Nasdaq composite (OTC) in blue and a 40% trend (four-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 first trading day of each month and dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level.

The OTC HL Ratio turned at the end of last week, but new lows exceeded new highs every day last week.

The next chart covers the past six months, showing the SPX in red and a 10% trend (19-day EMA) of NYSE new highs (NY NH) in green. The NY NH continued falling as the SPX closed at its all-time high.

The next chart is similar to the one above, except it shows the OTC in blue and the OTC NH in green. The OTC NH information has been calculated with Nasdaq data. Like the chart above, the OTC NH continued falling while the index rose.

The Positives

There is another week left in the end of year rally.

The next chart is similar to the first one, except it shows the SPX in red and the NY HL Ratio in blue. The NY HL Ratio information has been calculated with NYSE data. The NY HL Ratio made it to positive territory last week. 

The next chart covers the past six months, showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new lows (OTC NL) in brown. The OTC NL has been plotted on an inverted Y axis, so decreasing numbers of new lows move the indicator upward (up is good). New lows declined, moving the OTC NL upward last week.

The next chart is similar to the one above, except it shows the SPX in red and the NY NL in blue. The NY NL information has been calculated with NYSE data. The NY NL also turned upward last week.

Seasonality

Next week includes the last five trading days of the first 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 2020, while SPX data runs from 1928 to 2020. There are summaries for both the first year of the Presidential Cycle and all years combined. Average returns for the coming week have been strong by all measures. 

This report includes the last five days of December. The number following the year represents its position in the Presidential Cycle. The number following the daily return represents the day of the week:

• 1 = Monday, 2 = Tuesday, etc.

OTC Presidential Year 1 (PY1)

   Year           Day5        Day4        Day3        Day2        Day1        Totals

 1965-1       0.59% 4  -0.23% 1  -0.70% 2  -0.07% 3   0.27% 4    -0.13%

 1969-1      -0.31% 2  -0.41% 4  -0.01% 5  -0.27% 1  -1.01% 2    -2.02%

 1973-1      -0.64% 4   0.15% 5  -0.08% 2   0.57% 3   1.36% 5     1.37%

 1977-1       0.48% 1   0.56% 2   0.07% 3   0.79% 4   0.86% 5     2.76%

 1981-1       0.14% 3   0.57% 5  -0.72% 1   0.31% 2   0.77% 3     1.07%

 1985-1       0.63% 1   0.10% 3  -0.17% 4   0.18% 5   0.52% 1     1.25%

 1989-1       0.22% 5  -0.19% 2   0.03% 3   0.61% 4   0.61% 5     1.29%

 1993-1       0.44% 4   0.06% 1   0.41% 2   0.42% 3   0.76% 4     2.09%

 1997-1       0.63% 2   0.54% 4  -0.25% 5  -0.28% 1   0.25% 2     0.90%

   Avg:         0.41%     0.22%    -0.14%     0.25%     0.58%       1.32%

 2001-1       7.56% 5  -0.93% 2   1.84% 3   0.72% 4  -3.41% 5     5.78%

 2005-1      -0.30% 1   1.07% 2  -0.01% 3   0.06% 4  -0.13% 5     0.69%

 2009-1       0.22% 3   0.35% 5  -1.30% 1   2.67% 2   1.70% 3     3.64%

 2013-1      -0.28% 1  -0.74% 3  -0.14% 4  -0.86% 5   2.00% 1    -0.02%

 2017-1       0.28% 5   0.45% 2  -0.89% 3  -0.12% 4  -0.90% 5    -1.18%

   Avg:         1.50%     0.04%    -0.10%     0.50%    -0.15%       1.78%

OTC Summary for PY1 1965 - 2017

• Averages:      0.69%     0.10%    -0.14%     0.34%     0.26%       1.25%
• % Winners:       71%       64%       29%       64%       71%         71%
• MDD -  12/29/1965:  2.40% --  12/30/2005:  1.96% --  12/31/2001:  1.85%

OTC Summary for All Years 1963 - 2020

• Averages:      0.20%     0.29%     0.08%     0.20%     0.24%       1.01%
• % Winners:       63%       68%       51%       60%       68%         72%
• MDD - 12/29/2000:  3.41% --  12/31/2002:  3.34% --  12/31/2007:  2.65%

SPX PY1

    Year           Day5        Day4        Day3        Day2        Day1        Totals

 1929-1      -0.42% 3   0.85% 4   1.44% 5   0.29% 6   1.25% 1     3.41%

 1933-1      -0.60% 2  -0.15% 3   2.27% 4   2.52% 5  -0.43% 6     3.60%

 1937-1       0.18% 4  -0.70% 1   0.41% 2   1.53% 3  -0.52% 4     0.89%

 1941-1      -0.10% 4   0.48% 5   0.57% 6   0.67% 1   0.09% 2     1.72%

 1945-1      -0.91% 2  -0.46% 3   1.00% 4   1.37% 5   0.00% 6     1.00%

 1949-1      -0.39% 1  -0.72% 2   1.33% 3   0.00% 4  -0.52% 5    -0.31%

 1953-1       0.08% 3   0.15% 5   0.57% 1   0.72% 2  -0.08% 3     1.44%

 1957-1       0.65% 5   0.04% 3  -0.09% 4   0.45% 5   0.24% 1     1.30%

   Avg:        -0.13%    -0.10%     0.68%     0.64%    -0.05%       1.03%

 1961-1       0.09% 5   0.14% 2   0.45% 3   0.47% 4   0.10% 5     1.25%

 1965-1       0.00% 4  -0.10% 1  -0.31% 2   0.58% 3   0.53% 4     0.71%

 1969-1      -0.16% 2   0.10% 4  -0.39% 5  -0.90% 1   0.06% 2    -1.29%

 1973-1      -0.72% 4   0.63% 5   0.41% 2   0.54% 3   0.96% 5     1.81%

 1977-1       1.16% 1   0.67% 2  -0.40% 3   0.51% 4   0.54% 5     2.48%

   Avg:         0.07%     0.29%    -0.05%     0.24%     0.44%       0.99%

 1981-1       0.43% 3   0.51% 5  -1.13% 1   0.22% 2   0.32% 3     0.35%

 1985-1       0.76% 1  -0.17% 3  -0.43% 4   0.31% 5   0.59% 1     1.05%

 1989-1       0.36% 5  -0.37% 2   0.09% 3   0.84% 4  -0.60% 5     0.31%

 1993-1       0.17% 4  -0.14% 1  -0.27% 2   0.19% 3  -0.71% 4    -0.76%

 1997-1       0.55% 2   0.64% 4   0.13% 5  -0.39% 1  -1.74% 2    -0.81%

   Avg:         0.45%     0.09%    -0.32%     0.23%    -0.43%       0.03%

 2001-1       2.44% 5   0.71% 2   1.04% 3   0.40% 4  -1.04% 5     3.54%

 2005-1      -0.43% 1   0.72% 2  -0.01% 3   0.01% 4  -0.13% 5     0.15%

 2009-1       0.58% 3   0.54% 5  -0.39% 1   2.44% 2   1.42% 3     4.58%

 2013-1      -0.24% 1  -0.48% 3  -0.12% 4  -1.10% 5   1.69% 1    -0.26%

 2017-1       0.13% 5   0.22% 2  -0.84% 3  -0.03% 4  -0.46% 5    -0.98%

   Avg:         0.49%     0.34%    -0.06%     0.34%     0.29%       1.41%

SPX Summary for PY1 1929 - 2017

• Averages:      0.16%     0.13%     0.23%     0.51%     0.07%       1.10%
• % Winners:       57%       61%       52%       78%       52%         74%
• MDD - 12/28/1937:  6.78% --  12/26/1933:  1.94% --  12/30/2005:  1.61%

SPX Summary for All Years 1929 - 2020

• Averages:      0.00%     0.19%     0.27%     0.40%     0.18%       1.00%
• % Winners:       52%       64%       60%       69%       62%         77%
• MDD - 12/28/1937:  6.78% --  12/29/1987:  3.39% --  12/29/1930:  2.90%

Conclusion

The seasonal rally showed up on schedule and it has another week to go. The strongest sectors last week were precious metals and telecomm (for the third continuous week), while the weakest were retail and energy (for the second week in a row). I expect the major averages to be higher on Friday, Dec. 31 than they were on Thursday, Dec. 23.