The good news is: The Dow Jones Industrial Average (DJIA), S&P 500 (SPX) and Nasdaq composite (OTC) all closed at all-time highs last Monday.
The Negatives
Monday’s new highs were unconfirmed by most of the breadth indicators.
Last week the Russell 2000 (R2K) continued as the worst-performing of the major indices; down 0.47%.
Hindenburg Omens were triggered on Tuesday and Wednesday last week.
The first 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. Dashed vertical lines have been drawn on the 1st trading day of each month.
NY NH continued falling after failing to confirm the new SPX high.
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 declined to a slightly negative 48%.
The Positives
All-time record highs are positive.
New lows occasionally get up to threatening levels but then retreat to merely uncomfortable levels.
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 fell finishing the week at a slightly positive 56%.
The next chart is similar to the first one except is shows the OTC in blue and OTC NH, in green, has been calculated with NASDAQ data.
OTC NH confirmed Monday’s record index high. This confirmation implies higher prices ahead.
Seasonality
In the past 70 years, Thanksgiving has been observed only twice during the last week of November in the 3rd year of the Presidential Cycle. The first time, 1963 was near the time when President John F Kennedy was shot. The second time was in 1991.
Ignoring next week as the week of Thanksgiving; the week includes the last 4 trading days of November during the 3rd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis, for that period. I have also included Thanksgiving week data for 1963 and 1991.
OTC data covers the period from 1963 to 2018 while SPX data runs from 1928 to 2018. There are summaries for both the 3rd year of the Presidential Cycle and all years combined.
Average returns for the last 4 days of November have been positive by all measures, but not when Thanksgiving was observed during that period.
Report for the last 4 days of November.
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 3 (PY3)
Day4 Day3 Day2 Day1 Totals
1963-3 -1.20% 5 -1.48% 2 0.97% 3 0.09% 5 -1.62%
1967-3 0.63% 1 0.22% 2 0.95% 3 1.00% 4 2.80%
1971-3 0.09% 3 1.24% 5 1.42% 1 0.86% 2 3.60%
1975-3 0.23% 1 0.33% 2 0.49% 3 0.31% 5 1.36%
1979-3 0.42% 2 0.69% 3 0.44% 4 0.07% 5 1.62%
1983-3 0.28% 5 -0.36% 1 0.40% 2 0.02% 3 0.35%
1987-3 1.13% 2 0.35% 3 -0.41% 5 -3.57% 1 -2.50%
1991-3 -0.68% 1 -0.12% 2 0.11% 3 0.21% 5 -0.48%
1995-3 -0.09% 1 2.02% 2 0.71% 3 0.15% 4 2.80%
Avg 0.21% 0.51% 0.25% -0.62% 0.35%
1999-3 2.32% 3 0.80% 5 -0.77% 1 -2.49% 2 -0.14%
2003-3 2.81% 1 -0.21% 2 0.53% 3 0.36% 5 3.49%
2007-3 1.57% 2 3.18% 3 0.20% 4 -0.27% 5 4.68%
2011-3 -0.75% 5 3.52% 1 -0.47% 2 4.17% 3 6.46%
2015-3 0.01% 2 0.26% 3 0.22% 5 -0.37% 1 0.12%
Avg 1.19% 1.51% -0.06% 0.28% 2.92%
OTC summary for PY3 1963 - 2015
Averages 0.48% 0.74% 0.34% 0.04% 1.61%
% Winners 71% 71% 79% 71% 71%
MDD 11/30/1987 3.97% -- 11/30/1999 3.24% -- 11/26/1963 2.67%
OTC summary for all years 1963 - 2018
Averages 0.23% 0.19% 0.33% -0.01% 0.75%
% Winners 58% 68% 68% 64% 63%
MDD 11/30/2000 10.55% -- 11/30/1987 3.97% -- 11/30/1973 3.90%
OTC PY3 When Thanksgiving was during the last week of the Month
Day4 Day3 Day2 Day1 Totals
1963-3 -1.20% 5 -1.48% 2 0.97% 3 0.09% 5 -1.62%
1991-3 -0.68% 1 -0.12% 2 0.11% 3 0.21% 5 -0.48%
SPX PY3
Day4 Day3 Day2 Day1 Totals
1931-3 -3.44% 3 -2.31% 5 -1.50% 6 3.60% 1 -3.66%
1935-3 -1.44% 2 0.77% 3 -1.15% 5 0.08% 6 -1.74%
1939-3 0.08% 1 -0.40% 2 -1.12% 3 -1.05% 4 -2.50%
1943-3 -0.80% 5 -0.27% 6 -1.17% 1 0.27% 2 -1.97%
1947-3 -0.26% 2 -0.46% 3 -0.99% 5 0.07% 6 -1.65%
1951-3 1.03% 2 -0.22% 3 0.27% 4 0.93% 5 2.00%
1955-3 -0.09% 5 -0.66% 1 0.40% 2 -0.11% 3 -0.46%
Avg -0.01% -0.40% -0.52% 0.02% -0.91%
1959-3 0.47% 2 0.16% 3 0.45% 5 1.01% 1 2.09%
1963-3 -2.81% 5 3.98% 2 -0.18% 3 1.36% 5 2.35%
1967-3 0.29% 1 0.32% 2 0.00% 3 -0.50% 4 0.11%
1971-3 0.19% 3 1.78% 5 1.60% 1 0.62% 2 4.19%
1975-3 0.19% 1 1.13% 2 0.25% 3 0.33% 5 1.90%
Avg -0.33% 1.47% 0.43% 0.56% 2.13%
1979-3 -0.39% 2 0.37% 3 0.04% 4 -0.61% 5 -0.60%
1983-3 0.13% 5 -0.38% 1 0.82% 2 -0.90% 3 -0.33%
1987-3 1.40% 2 -0.93% 3 -1.54% 5 -4.18% 1 -5.25%
1991-3 -0.21% 1 0.70% 2 -0.37% 3 -0.35% 5 -0.24%
1995-3 0.23% 1 0.85% 2 0.20% 3 -0.37% 4 0.90%
Avg 0.23% 0.12% -0.17% -1.28% -1.10%
1999-3 0.88% 3 -0.04% 5 -0.61% 1 -1.34% 2 -1.10%
2003-3 1.62% 1 0.17% 2 0.43% 3 -0.02% 5 2.20%
2007-3 1.49% 2 2.86% 3 0.05% 4 0.78% 5 5.17%
2011-3 -0.27% 5 2.92% 1 0.22% 2 4.33% 3 7.21%
2015-3 0.12% 2 -0.01% 3 0.06% 5 -0.46% 1 -0.30%
Avg 0.77% 1.18% 0.03% 0.66% 2.64%
SPX summary for PY3 1931 - 2015
Averages -0.07% 0.47% -0.18% 0.16% 0.38%
% Winners 59% 55% 55% 50% 45%
MDD 11/28/1931 7.09% -- 11/30/1987 6.53% -- 11/22/1963 2.81%
SPX summary for all years 1928 - 2018
Averages 0.14% 0.06% 0.04% 0.19% 0.43%
% Winners 62% 52% 55% 56% 53%
MDD 11/28/1931 7.09% -- 11/30/1987 6.53% -- 11/29/1950 4.49%
SPX PY3 When Thanksgiving was during the last week of the Month
1963-3 -2.81% 5 3.98% 2 -0.18% 3 1.36% 5 2.35%
1991-3 -0.21% 1 0.70% 2 -0.37% 3 -0.35% 5 -0.24%
Conclusion
Last Monday’s new highs were not confirmed by the secondaries or most of the breadth indicators. Seasonality for the last 4 days of November has been positive.
I expect the major averages to be higher on Friday, November 29 than they were on Friday, November 22.
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