Last Thursday for the first time since April 4, new 52- week highs outnumbered new lows on the Nasdaq.  

The Negatives

The first chart covers the past 6 months showing the Nasdaq composite (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 vertical lines have been drawn on the 1st trading day of each month.  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 remained in negative territory. 

The Positives

On the NYSE new highs rose while new lows remained in mid double digits.

The next chart is similar to the first one except it shows the S&P 500 (SPX) in red and NY HL ratio, in blue, has been calculated with NYSE data.

NY HL ratio finished its fourth week in positive territory.

The next chart covers the past 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 its upward move last week.  It will take more than 201 new lows to turn the indicator downward.

The next chart is similar to the above except it shows the SPX in red and NY NL in blue has been calculated with NYSE data.

NY NL also continued moving upward.  It will require more than 80 NYSE new lows to turn this indicator downward.

The next chart covers the last 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in green. 

OTC NH rose last week to its highest high since early January.

The next chart is similar to the one above except it shows the SPX in red and NY NH, in green, has been calculated with NYSE data.

NY NH ditto.

Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of December during the 2nd 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 2021 while SPX data runs from 1953 to 2021.  There are summaries for both the 2nd 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 weaker during the 2nd 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 2 (PY2)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1966-2   0.13%  -0.38%   0.13%   0.67%  -0.24%   0.31%

 1970-2   1.07%   0.16%  -0.83%   0.73%   0.67%   1.80%

 1974-2  -0.52%   1.47%   0.87%   0.15%  -0.24%   1.74%

 1978-2   0.33%   0.94%   0.66%   0.08%   0.19%   2.20%


 1982-2   0.90%   0.57%   0.02%  -1.44%  -1.43%  -1.38%

 1986-2  -0.54%  -0.55%   0.01%  -0.37%  -0.50%  -1.95%

 1990-2  -0.02%  -0.94%   0.66%   0.29%  -0.72%  -0.72%

 1994-2   0.09%  -0.60%  -0.94%  -2.06%  -0.01%  -3.52%

 1998-2   1.87%  -0.28%   0.77%  -1.68%   0.66%   1.33%


 Avg      0.46%  -0.36%   0.10%  -1.05%  -0.40%  -1.25%


 2002-2  -3.89%   1.73%   0.42%   0.21%  -2.65%  -4.18%

 2006-2   1.46%   0.16%  -0.27%  -0.74%   0.40%   1.01%

 2010-2   0.13%   0.14%   0.41%   0.29%   0.80%   1.77%

 2014-2  -0.84%   0.54%  -1.73%   0.52%  -1.16%  -2.67%

 2018-2   0.74%   0.16%   0.95%  -0.39%  -2.26%  -0.81%


 Avg     -0.48%   0.55%  -0.04%  -0.02%  -0.97%  -0.98%


OTC summary for PY2 1966 - 2018 

 Avg      0.07%   0.22%   0.08%  -0.27%  -0.46%  -0.36%

 Win%       64%     64%     71%     57%     36%     50%


OTC summary for all years 1963 - 2021

 Avg      0.14%   0.11%  -0.04%  -0.31%   0.15%   0.06%

 Win%       61%     51%     53%     49%     56%     49%


SPX PY2

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1954-2   0.78%   0.46%  -0.17%  -0.49%  -0.37%   0.21%

 1958-2   0.11%   0.57%   1.21%  -0.21%  -0.24%   1.45%


 1962-2  -1.25%   0.08%   0.50%  -0.34%   0.24%  -0.77%

 1966-2   0.14%   0.75%   1.09%   0.40%   0.11%   2.49%

 1970-2   0.54%  -0.52%   0.08%   0.42%   0.38%   0.89%

 1974-2   0.91%   2.56%   0.58%  -0.33%  -0.56%   3.16%

 1978-2  -0.14%   1.34%   0.05%  -0.42%  -0.46%   0.37%


 Avg      0.04%   0.84%   0.46%  -0.05%  -0.06%   1.23%


 1982-2   2.22%   0.67%  -0.64%  -1.28%  -0.31%   0.67%

 1986-2   0.00%  -0.75%   0.67%  -1.11%  -0.33%  -1.52%

 1990-2   0.35%  -0.74%   1.15%  -0.26%  -0.77%  -0.27%

 1994-2   0.01%  -0.05%  -0.41%  -1.28%   0.34%  -1.40%

 1998-2   0.93%  -0.53%   0.18%  -1.56%   0.13%  -0.85%


 Avg      0.70%  -0.28%   0.19%  -1.10%  -0.19%  -0.67%


 2002-2  -2.22%   1.40%   0.06%  -0.37%  -1.34%  -2.48%

 2006-2   0.89%   0.40%  -0.13%  -0.40%   0.18%   0.94%

 2010-2  -0.13%   0.05%   0.37%   0.38%   0.60%   1.28%

 2014-2  -0.73%  -0.02%  -1.64%   0.45%  -1.62%  -3.55%

 2018-2   0.18%  -0.04%   0.54%  -0.02%  -1.91%  -1.25%


 Avg     -0.40%   0.36%  -0.16%   0.01%  -0.82%  -1.01%


SPX summary for PY2 1954 - 2018 

 Avg      0.15%   0.33%   0.20%  -0.38%  -0.35%  -0.04%

 Win%       65%     59%     71%     24%     41%     53%


SPX summary for all years 1953 - 2021

 Avg      0.17%   0.02%   0.01%  -0.26%   0.14%   0.08%

 Win%       57%     46%     53%     42%     64%     54%

Conclusion

The market appears to be thrilled that interest rates, although higher than they have been in a long time, are not going straight to the moon.  Seasonality for the coming week has been weaker than any time in the last 2 months.

The strongest sectors last week were Precious metals (for the 4th week in a row) and Basic Materials while the weakest were Banks and Energy (for the 4th week in a row).

I expect the major averages to be lower on Friday, December 9, than they were on Friday, December 2.

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