Technical Market Report For December 2, 2023
The good news is:
- The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) both closed at their highs for the year on Friday.
The Negatives
The market is overbought.
The first chart covers the last 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, although moving sharply upward, failed to confirm the SPX at its new high for the year.
(Click on image to enlarge)
The next chart is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH, in green, has been calculated with NASDAQ data.
The OTC closed less than 1% off its high for the year while OTC NH is far from its July high.
(Click on image to enlarge)
The Positives
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 finished the week slightly above the neutral line..
(Click on image to enlarge)
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 closed the week well into positive territory.
(Click on image to enlarge)
The next chart covers the last 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good).
OTC NL continued moving sharply upward.
(Click on image to enlarge)
The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.
Ditto NY NL.
(Click on image to enlarge)
Summation indices are running totals of oscillator values.
Short term momentum indicators applied to summation indices make them nearly binary.
The next chart covers the past 6 months showing the SPX in red and momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE.
NYSE SI’s remained maxed out.
(Click on image to enlarge)
The next chart is similar to the one above, except it shows the OTC, in blue, as the index and the SI’s have been generated from NASDAQ breadth data.
Ditto OTC SI’s.
(Click on image to enlarge)
Seasonality
Next week includes the last 5 trading days prior to the 2nd Friday of December during the 3rd 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 2022 while SPX data runs from 1953 to 2022. There are summaries for both the 3rd 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 mixed and stronger during the 3rd year of the Presidential Cycle than other years.
Report for the week before the 2nd Friday of December.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.
OTC Presidential Year 3 (PY3)
Year Mon Tue Wed Thur Fri Totals
1963-3 -0.25% 0.14% 0.26% 0.25% -0.37% 0.03%
1967-3 0.87% 0.99% 0.47% 0.37% 0.09% 2.79%
1971-3 -0.32% 0.32% 0.42% 0.24% 0.78% 1.44%
1975-3 0.27% -0.53% 0.98% -0.23% -0.23% 0.26%
1979-3 0.33% -0.09% 0.46% 0.31% 0.71% 1.71%
Avg 0.18% 0.16% 0.52% 0.19% 0.20% 1.25%
1983-3 -0.50% -0.16% 0.04% -0.56% -0.02% -1.20%
1987-3 0.63% 1.08% 1.34% -0.38% 0.59% 3.26%
1991-3 -0.18% -0.21% -0.48% 0.82% 0.91% 0.86%
1995-3 1.37% -0.36% -0.39% -0.80% 0.87% 0.69%
1999-3 0.72% 1.15% -0.02% 0.23% 0.72% 2.80%
Avg 0.41% 0.30% 0.09% -0.14% 0.61% 1.28%
2003-3 0.57% -2.00% -0.19% 1.98% 0.34% 0.70%
2007-3 0.47% -2.00% 0.71% -0.10% -1.23% -2.15%
2011-3 1.10% -0.23% -0.01% -1.99% 1.94% 0.80%
2015-3 -0.79% -0.07% -1.48% 0.44% -2.00% -3.89%
2019-3 -0.40% -0.07% 0.44% 0.73% 0.20% 0.91%
Avg 0.19% -0.87% -0.11% 0.21% -0.15% -0.73%
OTC summary for PY3 1963 - 2019
Avg 0.26% -0.14% 0.17% 0.09% 0.22% 0.60%
Win% 60% 33% 60% 60% 67% 80%
OTC summary for all years 1963 - 2022
Avg 0.13% -0.07% -0.03% -0.22% 0.09% -0.11%
Win% 60% 50% 53% 50% 55% 47%
SPX PY3
Year Mon Tue Wed Thur Fri Totals
1955-3 0.57% 0.00% -0.33% 0.59% 0.15% 0.99%
1959-3 0.19% 0.64% -0.62% 0.08% -0.24% 0.06%
1963-3 -0.05% 0.04% -0.12% 0.01% 0.20% 0.08%
1967-3 0.63% 0.14% 0.43% -0.12% -0.12% 0.97%
1971-3 -0.57% 0.37% 0.05% 0.04% 0.75% 0.65%
1975-3 0.29% 0.26% 0.89% -0.32% 0.03% 1.16%
1979-3 0.14% -0.17% 0.03% 0.14% 1.16% 1.30%
Avg 0.09% 0.13% 0.26% -0.05% 0.41% 0.83%
1983-3 0.20% -0.18% 0.27% -0.43% -0.07% -0.21%
1987-3 2.00% 2.00% 1.69% -2.00% 0.75% 4.44%
1991-3 -0.22% -0.10% -0.05% 1.02% 0.77% 1.41%
1995-3 1.10% 0.65% 0.40% -0.65% 0.21% 1.73%
1999-3 -0.69% -1.00% -0.38% 0.30% 0.64% -1.13%
Avg 0.48% 0.28% 0.39% -0.35% 0.46% 1.25%
2003-3 0.73% -0.85% -0.11% 1.15% 0.27% 1.20%
2007-3 0.75% -2.00% 0.61% 0.12% -1.37% -1.90%
2011-3 1.03% 0.11% 0.20% -2.00% 1.69% 1.03%
2015-3 -0.70% -0.65% -0.77% 0.23% -1.94% -3.84%
2019-3 -0.32% -0.11% 0.29% 0.86% 0.01% 0.73%
Avg 0.30% -0.70% 0.04% 0.07% -0.27% -0.56%
SPX summary for PY# 1955 - 2019
Avg 0.30% -0.05% 0.15% -0.06% 0.17% 0.51%
Win% 65% 50% 59% 65% 71% 76%
SPX summary for all years 1953 - 2022
Avg 0.12% -0.03% 0.01% -0.23% 0.13% 0.00%
Win% 56% 45% 52% 43% 63% 51%
Conclusion
The breadth indicators were catching up with prices last week and Seasonality for the coming week is modestly positive.
The strongest sectors last week were Finance and Precious metals (for the 2nd week) while the weakest were Electronics and Energy (for the 4th week).
I expect the major averages to be higher on Friday December 8 than they were on Friday December 1.
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