Technical Market Report For January 18, 2025
The good news is:
- The market made a sharp reversal to the upside last week.
The Negatives
The first chart covers the last 6 months showing the S&P 500 (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 turned upward last week, however the SPX is only 1.5% off its all time high and there is no chance NY NH would confirm a new SPX all time high. Breadth continues to deteriorate.
The next chart is similar to the 1st one except it shows the NASDAQ composite (OTC) in blue and OTC NH in green has been calculated with NASDAQ data.
OTC NH OTC NH continued its decline.
The Positives
The next chart covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue. 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).
NY HL ratio moved sharply upward into positive territory last week.
The next chart is similar to the one above except it shows the OTC in blue and OTC HL ratio, in red, has been calculated with NASDAQ data.
OTC HL Ratio turned upward and is likely to go positive in the next few days.
The next chart covers the past 6 months showing the NASDAQ composite (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 reversed and moved upward last week.
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 reversed, moving upward last week.
Seasonality
Next week includes the 4 trading days prior to the 4th Friday of January during the 1st year of the Presidential Cycle. The tables below show the daily change, on a percentage basis, for that period. The market will be closed Monday in observance of the MLK holiday.
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.
Seasonally next weeks returns have been modest and mixed.
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 1 (PY1)
Year Mon Tue Wed Thur Fri Totals
1965-1 0.61% 0.39% 0.62% 0.75% 0.36% 2.72%
1969-1 0.24% 0.19% -0.23% 0.02% 0.40% 0.62%
1973-1 -0.54% -0.53% -1.47% 0.00% -0.56% -3.10%
1977-1 0.05% -0.32% -0.57% -0.49% -0.33% -1.65%
1981-1 0.22% -1.42% -0.32% -0.49% 0.71% -1.29%
Avg 0.12% -0.34% -0.39% -0.05% 0.11% -0.54%
1985-1 1.28% 0.75% 0.86% 0.60% 0.61% 4.10%
1989-1 -0.43% 0.51% 0.52% 0.78% 0.22% 1.60%
1993-1 0.76% 0.03% -1.31% -0.46% 0.24% -0.74%
1997-1 1.13% 0.93% 0.81% -0.70% -1.06% 1.11%
2001-1 -0.45% 2.99% 0.66% -3.67% 0.98% 0.51%
Avg 0.46% 1.04% 0.31% -0.69% 0.20% 1.31%
2005-1 -1.26% 0.56% 1.29% 0.05% -0.55% 0.10%
2009-1 0.00% -5.78% 4.60% -2.76% 0.81% -3.14%
2013-1 0.00% 0.27% 0.33% -0.74% 0.62% 0.48%
2017-1 -0.04% 0.86% 0.99% -0.02% 0.10% 1.89%
2021-1 0.69% -0.07% -2.61% 0.50% -2.00% -3.49%
Avg -0.20% -0.83% 0.92% -0.59% -0.21% -0.83%
OTC summary for PY1 1965 - 2021
Avg 0.17% -0.04% 0.28% -0.47% 0.04% -0.02%
Win% 62% 67% 60% 43% 67% 60%
OTC summary for all years 1963 - 2024
Avg -0.07% -0.09% 0.17% 0.12% 0.07% 0.21%
Win% 56% 49% 58% 50% 67% 61%
SPX PY1
Year Mon Tue Wed Thur Fri Totals
1953-1 -0.04% 0.50% -0.19% 0.11% -0.19% 0.19%
1957-1 -0.54% 0.29% 0.76% 0.36% -0.47% 0.41%
1961-1 0.55% 0.27% 0.13% 0.15% 1.02% 2.12%
1965-1 0.14% 0.09% 0.33% 0.29% 0.09% 0.94%
1969-1 -0.33% -0.06% 0.34% 0.44% -0.05% 0.34%
1973-1 -0.48% 0.01% -1.26% 0.00% -0.24% -1.97%
1977-1 -0.07% -0.12% -0.77% -0.54% 0.14% -1.35%
1981-1 -0.30% -2.02% -0.22% -0.84% -0.02% -3.40%
Avg -0.21% -0.42% -0.31% -0.16% -0.02% -1.09%
1985-1 2.28% 0.14% 1.04% -0.33% 0.36% 3.49%
1989-1 -0.74% 1.40% 0.23% 0.88% 0.73% 2.50%
1993-1 0.89% -0.01% -0.42% 0.13% 0.03% 0.62%
1997-1 0.07% 0.77% 0.45% -1.10% -0.91% -0.72%
2001-1 0.03% 1.30% 0.29% -0.50% -0.19% 0.93%
Avg 0.51% 0.72% 0.32% -0.18% 0.01% 1.36%
2005-1 -0.35% 0.40% 0.48% 0.04% -0.27% 0.30%
2009-1 0.00% -5.28% 4.35% -1.52% 0.54% -1.91%
2013-1 0.00% 0.44% 0.15% 0.00% 0.54% 1.14%
2017-1 -0.27% 0.66% 0.80% -0.07% -0.09% 1.03%
2021-1 0.36% -0.15% -2.57% 0.98% -1.93% -3.31%
Avg -0.09% -0.79% 0.64% -0.11% -0.24% -0.55%
SPX summary for PY1 1953 - 2021
Avg 0.08% -0.08% 0.22% -0.09% -0.05% 0.08%
Win% 44% 67% 67% 59% 44% 67%
SPX summary for all years 1953 - 2024
Avg -0.07% 0.00% 0.15% 0.15% 0.03% 0.27%
Win% 54% 58% 57% 61% 54% 65%
Money supply (M2) and Interest Rates
The following chart was supplied by Gordon Harms.
The chart, was made with FastTrack, covers the past 2 years showing the SPX in red and M2 money supply in green.
Money supply has remained constant for several months.
Treasury rates at their close last Friday and their changes from last month:
2yr yield 4.291% up from 4.247%
5yr yield 4.438% up from 4.530%
10yr yield 4.630% up from 4.396%
30yr yield 4.860% up from 4.460%
There are currently no inversions.
Many economists consider the un inverting of the yield curve a bad sign for the economy.
Conclusion
The market had a good week and is overbought. New lows disappeared and all of the major indices moved sharply upward.
The strongest sectors last week were Energy (for the 3rd week) and Basic materials while the weakest were Leisure (for the 2nd week) and Health care.
I expect the major averages to be lower on Friday January 24 than they were on Friday January 17.
More By This Author:
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Disclosure: None
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