Technical Market Report For December 13, 2025
The good news is:
- The Russell 2000 (R2K), S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) all closed at all time highs last Thursday.
The Negatives
The first chart covers the last 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 moved up nicely last week, but, if the OTC hits a new high any time soon, it will be unconfirmed OTC_NH.
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 with NYSE data.
NY NH moved sharply upward last week, but failed to confirm Thursday’s SPX all time high. It is higher than it was when the SPX hit its last time high in late October.
The Positives
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 numbers of new lows move the indicator upward (up is good).
NY NL continued 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 with Nasdaq data.
OTC NL also continued moving sharply upward last week.
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 (equal numbers of new highs and new lows).
OTC HL Ratio has remained in comfortably positive territory.
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 finished the week at a very strong 88%.
Seasonality
Next week includes the 5 trading prior to the 3rd Friday of December during the 1st year of the Presidential Cycle. The tables below show the daily performance on a percentage basis for both the OTC and SPX.
OTC data covers the period from 1963 to 2024 while SPX data runs from 1953 to 2024. 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.
Seasonality for the coming week has been modest, mixed and slightly weaker during the 1st year of the Presidential Cycle than other years.
Report for the week before the 3rd Friday of December.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.
OTC Presidential Year 1 (PY1)
Year Mon Tue Wed Thur Fri Totals
1965-1 0.81% 0.12% 0.27% 0.14% -0.07% 1.27%
1969-1 0.04% 0.14% -0.54% -0.66% 1.28% 0.26%
1973-1 -0.56% 1.60% -0.35% 0.03% -0.83% -0.10%
1977-1 0.31% 0.20% -0.13% -0.07% 0.15% 0.46%
1981-1 -1.50% -0.26% -0.04% 0.31% 0.67% -0.81%
Avg -0.18% 0.36% -0.16% -0.05% 0.24% 0.21%
1985-1 0.36% -0.59% -0.24% 0.06% 0.14% -0.27%
1989-1 -0.83% -0.44% 0.16% -0.81% -0.81% -2.74%
1993-1 -0.13% -1.09% 0.20% 0.34% 0.49% -0.19%
1997-1 0.00% 1.07% -0.36% -1.56% 0.10% -0.76%
2001-1 1.76% 0.87% -1.09% -3.25% 1.42% -0.29%
Avg 0.29% -0.03% -0.27% -1.04% 0.27% -0.85%
2005-1 0.19% 0.18% -0.11% -0.09% -0.36% -0.19%
2009-1 0.99% -0.50% 0.27% -1.22% 1.45% 1.00%
2013-1 0.71% -0.14% 1.15% -0.29% 1.15% 2.58%
2017-1 0.51% -0.18% 0.20% -0.28% 1.16% 1.40%
2021-1 -1.39% -1.14% 2.15% -2.47% -0.07% -2.92%
Avg 0.20% -0.36% 0.73% -0.87% 0.67% 0.37%
OTC summary for PY1 1965 - 2021
Avg 0.09% -0.01% 0.10% -0.65% 0.39% -0.09%
Win% 64% 47% 47% 33% 67% 40%
OTC summary for all years 1963 - 2024
Avg -0.01% 0.13% -0.04% -0.09% 0.12% 0.11%
Win% 53% 53% 51% 56% 58% 58%
SPX PY1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.28% 0.08% 1.01% -0.08% 0.20% 0.93%
1957-1 -1.50% -1.74% -0.10% 1.07% -0.80% -3.08%
1961-1 0.49% 0.35% -0.15% -0.76% 0.04% -0.04%
1965-1 0.03% 0.05% 0.15% 0.11% -0.04% 0.30%
1969-1 -0.30% -0.91% -0.58% 1.58% 0.85% 0.65%
1973-1 -0.58% 2.15% 0.08% -0.28% -1.07% 0.30%
1977-1 -0.02% -0.07% 0.50% -0.51% -0.16% -0.26%
1981-1 -1.72% 0.17% -0.46% 0.57% 0.71% -0.73%
Avg -0.52% 0.28% -0.06% 0.29% 0.06% 0.05%
1985-1 0.99% -0.65% -0.40% 0.10% 0.44% 0.48%
1989-1 -0.04% 0.91% 0.29% -0.52% -0.23% 0.42%
1993-1 0.38% -0.57% -0.26% 0.32% 0.66% 0.53%
1997-1 1.05% 0.48% -0.26% -1.06% -0.89% -0.68%
2001-1 1.00% 0.75% 0.58% -0.84% 0.44% 1.94%
Avg 0.68% 0.19% -0.01% -0.40% 0.08% 0.54%
2005-1 0.08% 0.56% 0.42% -0.14% -0.28% 0.63%
2009-1 0.70% -0.55% 0.11% -1.18% 0.58% -0.34%
2013-1 0.63% -0.31% 1.66% -0.06% 0.48% 2.41%
2017-1 0.32% 0.15% -0.05% -0.41% 0.90% 0.92%
2021-1 -0.91% -0.75% 1.63% -0.87% -1.03% -1.93%
Avg 0.16% -0.18% 0.76% -0.53% 0.13% 0.34%
SPX summary for PY1 1953 - 2021
Avg 0.02% 0.01% 0.23% -0.16% 0.04% 0.14%
Win% 56% 56% 56% 33% 56% 61%
SPX summary for all years 1953 - 2024
Avg 0.04% 0.18% 0.04% -0.06% 0.10% 0.30%
Win% 56% 54% 51% 47% 57% 60%
Conclusion
The market is overbought, but the breadth indicators have remained strong.
Seasonality for the coming week leaves something to be desired and a pullback next would be an ideal setup for the Santa Claus rally.
The strongest sectors last week were Banks and Transportation while the weakest were Electronics and Energy.
I expect (hope) the major averages to be lower on Friday December 19 than they were on Friday December 12.
Last week the SPX was down while the other major averages were up so I am calling last week's negative forecast a tie.
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