Technical Market Report For Saturday, Oct. 17

Technical market report for October 17, 2020

The good news is that new highs continued their expansion, while new lows remained insignificant.

The Negatives

The seasonality estimates for next week have been historically very bad.

The Positives

The first chart covers the past six 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 first trading day of each month. The OTC NH continued its upward move, faltering a bit at the end of the week.

The next chart is similar to the first one, except it shows the S&P 500 (SPX) in red and the NY NH in green. The information has been calculated with NYSE data. Last week, the NY NH hit its highest level in the past six months.

The next chart covers the past six months, showing the SPX in red and a 40% trend (four-day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio) in blue. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level. The NY HL Ratio fell slightly to a very strong 87%.

The next chart is similar to the one above, except it shows the OTC in blue and the OTC HL Ratio in red. The information has been calculated with NASDAQ data. The OTC HL Ratio also declined a bit to 82%, which is still very strong.

Seasonality

Next week includes the five trading days prior to the fourth Friday of October, all during the fourth year of the Presidential Cycle. The tables below show the daily change on a percentage basis for that period.

The OTC data covers the period from 1963 to 2019, while the SPX data runs from 1953 to 2019. There are summaries for both the fourth year of the Presidential Cycle, and all years combined. Prior to 1953, the market traded six days a week, so that data has been ignored.

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Comments

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William K. 9 months ago Member's comment

Interesting but it does not look like good news.

Mike Burk 9 months ago Author's comment

Good news is sometimes hard to find.

As long as new lows are not expanding nothing really bad is going to happen.

William K. 9 months ago Member's comment

You make a very good point.