Technical Market Report For January 17, 2026
The good news is:
- The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed at all time highs last Monday. The Russell 2000 (R2K) all closed at all time highs every day last week, except Monday.
The Negatives
The market, at least as measured by the R2K, is overbought.
The Positives
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 has been on a tear, rising rapidly since the 1st of the year.
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 did not confirm the new SPX high last Monday, but continued moving sharply upward all week.
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 has been moving upward since the 1st of the year..
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.
NY NL continued moving slowly upward.
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 leveled off, finishing the week at a comfortable 73%.
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 leveled off at a very strong 87%.
Seasonality
Next week includes the 4 trading days prior to the 4th Friday of January during the 2nd year of the Presidential Cycle. The market will be closed Monday in observance of the Martin Luther King holiday.
OTC data covers the period from 1963 to 2025 while SPX data runs from 1953 to 2025. 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.
Seasonality for the coming week has been, on average, positive over all years, and modestly negative during the 2nd year of the Presidential Cycle.
Report for the week before the 4th Friday of January.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through the 4th Friday.
OTC Presidential Year 2 (PY2)
Year Mon Tue Wed Thur Fri Totals
1966-2 0.12% -0.07% 0.27% -0.08% 0.02% 0.25%
Avg 0.12% -0.07% 0.27% -0.08% 0.02% 0.25%
1970-2 -0.93% -0.91% 0.00% 0.31% 0.18% -1.36%
1974-2 -0.88% 0.86% 0.49% -0.16% -0.22% 0.09%
1978-2 -0.29% 0.20% 0.33% -0.34% 0.09% -0.01%
1982-2 -1.24% -0.06% 0.09% 1.44% 1.17% 1.39%
1986-2 -0.37% -0.30% -0.54% -0.02% 0.66% -0.56%
Avg -0.74% -0.04% 0.09% 0.25% 0.38% -0.09%
1990-2 -2.03% -0.38% -1.08% -0.10% -0.92% -4.50%
1994-2 -0.46% -0.54% 0.31% 0.52% 0.46% 0.29%
1998-2 0.00% 1.74% -0.14% -0.72% -0.04% 0.85%
2002-2 0.00% -2.48% 2.12% 1.05% -0.25% 0.44%
2006-2 0.03% 0.75% -0.20% 0.99% 0.93% 2.50%
Avg -0.82% -0.18% 0.20% 0.35% 0.04% -0.09%
2010-2 0.25% -0.32% 0.80% -1.91% -1.45% -2.63%
2014-2 0.00% 0.67% 0.41% -0.57% -2.15% -1.64%
2018-2 0.97% 0.70% -0.60% -0.05% 1.27% 2.29%
2022-2 0.63% -2.28% 0.02% -1.40% 3.13% 0.10%
OTC summary for PY2 1966 - 2022
Avg -0.35% -0.16% 0.16% -0.07% 0.19% -0.17%
Win% 42% 40% 64% 33% 60% 60%
OTC summary for all years 1963 - 2025
Avg -0.07% -0.08% 0.19% 0.12% 0.06% 0.23%
Win% 56% 50% 59% 51% 66% 61%
SPX PY2
Year Mon Tue Wed Thur Fri Totals
1954-2 0.31% 0.62% -0.31% 0.04% 0.23% 0.89%
1958-2 0.61% -0.12% -0.24% 0.39% 0.85% 1.48%
1962-2 0.09% -0.76% 0.16% -0.07% -0.32% -0.90%
1966-2 0.26% 0.15% -0.16% -0.03% -0.38% -0.17%
1970-2 -1.40% 0.20% 0.09% 0.04% -0.98% -2.04%
1974-2 -0.17% 1.21% 0.54% -0.26% -0.20% 1.12%
1978-2 -0.72% 0.01% 0.16% -0.91% 0.00% -1.46%
1982-2 0.03% -0.19% 0.48% 2.75% 1.24% 4.30%
Avg -0.40% 0.28% 0.22% 0.32% -0.08% 0.35%
1986-2 -0.43% -0.84% -1.12% 0.37% 1.07% -0.95%
1990-2 -2.59% 0.37% -0.41% -1.27% -0.09% -3.97%
1994-2 -0.58% -0.22% 0.48% 0.81% 0.35% 0.84%
1998-2 0.00% 1.78% -0.80% -0.80% -0.57% -0.38%
2002-2 0.00% -0.73% 0.79% 0.35% 0.10% 0.51%
Avg -1.20% 0.07% -0.21% -0.10% 0.17% -0.79%
2006-2 0.18% 0.24% -0.17% 0.72% 0.78% 1.75%
2010-2 0.46% -0.42% 0.49% -1.18% -0.98% -1.64%
2014-2 0.00% 0.28% 0.06% -0.89% -2.09% -2.64%
2018-2 0.81% 0.22% -0.06% 0.06% 1.18% 2.21%
2022-2 0.28% -1.22% -0.15% -0.54% 2.43% 0.81%
Avg 0.43% -0.18% 0.03% -0.37% 0.26% 0.10%
SPX summary for PY2 1954 - 2022
Avg -0.19% 0.03% -0.01% -0.02% 0.15% -0.01%
Win% 60% 56% 50% 50% 53% 50%
SPX summary for all years 1953 - 2025
Avg -0.07% 0.02% 0.16% 0.16% 0.02% 0.29%
Win% 54% 59% 58% 61% 53% 66%
Conclusion
Market breadth has been strong and the overbought small caps are leading the way upward.
The strongest sectors last week were Utilities and Energy while the weakest were Health care and Internet.
I expect the major averages to be higher on Friday January 23 than they were on Friday January 16.
Last week the R2K finished the week up while the other of what I refer to as the Major Indices were down, so I am calling last week’s positive forecast a tie.
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