The good news is:

• The Russell 2000 (R2K) closed at an all time high last Thursday.

 

The Negatives

Seasonality has been negative for the next week or two.

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 first trading day of each month.  

OTC NH is not leading the index upward.  If the OTC closes at a new all time high any time soon It will be seriously unconfirmed by 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 will not confirm any new SPX high in the near future.  

 

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 to move 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 moved 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 at 82% is very strong. 

 

Seasonality

Next week includes the 5 trading prior to the second Friday of December during the first 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 first 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 mixed and weaker during the first year of the Presidential Cycle.

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 1 (PY1)or   

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1965-1  -0.30%   0.14%   1.31%   1.02%   0.80%   2.97%

 1969-1  -0.66%  -1.02%  -0.32%   0.28%   0.60%  -1.13

 1973-1   1.32%  -1.43%  -1.51%  -1.86%   0.57%  -2.91%

 1977-1   0.05%  -1.13%  -0.12%   0.20%   0.49%  -0.50%

 1981-1  -0.58%  -0.79%   0.08%   0.32%  -0.14%  -1.12%

 

 Avg     -0.03%  -0.85%  -0.11%  -0.01%   0.46%  -0.54%

 

 1985-1   0.09%   0.13%   0.49%   0.54%   1.06%   2.32%

 1989-1   0.26%   0.06%  -0.41%  -0.08%  -0.02%  -0.19%

 1993-1  -0.15%  -0.23%  -0.19%  -0.83%  -0.10%  -1.49%

 1997-1   1.08%  -1.87%  -1.48%  -2.39%  -1.41%  -6.07%

 2001-1  -1.44%   0.49%   0.47%  -3.23%   0.34%  -3.36%

 

 Avg     -0.03%  -0.28%  -0.22%  -1.20%  -0.02%  -1.76%

 

 2005-1  -0.69%   0.14%  -0.39%  -0.25%   0.46%  -0.73%

 2009-1  -0.22%  -0.76%   0.49%   0.33%  -0.03%  -0.18%

 2013-1   0.15%  -0.20%  -1.40%  -0.14%   0.06%  -1.52%

 2017-1  -1.05%  -0.19%   0.21%   0.54%   0.40%  -0.10%

 2021-1   0.93%   3.03%   0.64%  -1.71%   0.73%   3.62%

 

 Avg     -0.18%   0.40%  -0.09%  -0.25%   0.32%   0.22%

 

OTC summary for PY1 1965 - 2021 

 Avg     -0.08%  -0.24%  -0.14%  -0.48%   0.26%  -0.69%

 Win%       47%     40%     47%     47%     67%     20%

 

OTC summary for all years 1963 - 2024

 Avg      0.08%   0.08%  -0.03%  -0.27%   0.14%   0.01%

 Win%       58%     50%     52%     50%     56%     50%

 

SPX PY1

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1953-1  -0.12%  -0.32%  -0.12%  -0.24%  -0.08%  -0.88%

 1957-1  -0.94%  -0.88%  -0.12%   0.10%   0.44%  -1.40%

 1961-1   0.32%  -0.11%   0.08%  -0.40%   0.47%   0.36%

 

 1965-1  -0.75%   0.88%  -0.12%   0.31%   0.26%   0.59%

 1969-1  -1.20%  -0.09%  -0.08%   0.04%   0.32%  -1.00%

 1973-1   1.49%  -1.95%  -2.57%  -1.27%   0.99%  -3.32%

 1977-1  -0.42%  -1.53%  -0.05%   0.19%   0.74%  -1.07%

 1981-1  -0.85%  -0.30%   0.53%   0.18%  -0.62%  -1.05%

 

 Avg     -0.34%  -0.60%  -0.46%  -0.11%   0.34%  -1.17%

 

 1985-1   0.62%   0.07%   0.94%   0.20%   1.55%   3.38%

 1989-1   0.22%  -0.52%  -0.29%  -0.28%   0.32%  -0.55%

 1993-1   0.33%   0.07%  -0.10%  -0.45%  -0.05%  -0.21%

 1997-1  -0.14%  -0.67%  -0.61%  -1.53%  -0.16%  -3.12%

 2001-1  -1.59%  -0.28%   0.03%  -1.56%   0.33%  -3.06%

 

 Avg     -0.11%  -0.27%  -0.01%  -0.72%   0.40%  -0.71%

 

 2005-1  -0.24%   0.13%  -0.50%  -0.12%   0.28%  -0.45%

 2009-1  -0.25%  -1.03%   0.37%   0.58%   0.37%   0.05%

 2013-1   0.18%  -0.32%  -1.13%  -0.38%  -0.01%  -1.66%

 2017-1  -0.11%  -0.37%  -0.01%   0.29%   0.55%   0.35%

 2021-1   1.17%   2.07%   0.31%  -0.72%   0.95%   3.79%

 

 Avg      0.15%   0.10%  -0.19%  -0.07%   0.43%   0.42%

 

SPX summary for PY1 1953 - 2021 

 Avg     -0.13%  -0.29%  -0.19%  -0.28%   0.37%  -0.51%

 Win%       39%     28%     33%     44%     72%     33%

 

SPX summary for all years 1953 - 2024

 Avg      0.12%   0.00%   0.01%  -0.23%   0.13%   0.03%

 Win%       54%     44%     52%     43%     63%     53%

 

Conclusion

The market is overbought and Seasonality for the coming week has been weak.  Recently the market has been closely following the Seasonal pattern.

The strongest sectors last week were Technology and Energy while the weakest were Biotech and Utilities.

I expect the major averages to be lower on Friday December 12 than they were on Friday December 5.

 

 

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