The good news is:

• 52 week new highs increased 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 has been lethargic.

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.

Ditto OTC NH

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 came alive for a couple days last week then headed back down. 

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 popped up into positive territory for a day or two then headed downward. 

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).  

After a nice run, OTC NL turned downward.

The Positives

Big tech had another good week.  Unfortunately the small caps did not follow.

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 the upward move.

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 are all positive and rising.

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.  

The OTC HL SI has turned downward while the others are still moving upward. 

Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of November 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 weaker during the 3rd year of the Presidential Cycle than other years.

Report for the week before the 3rd Friday of November.

The number following the year is the position in the Presidential Cycle.

Daily returns from Monday through 3rd Friday.


OTC Presidential Year 3 (PY3)

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1963-3   0.48%   0.17%  -0.06%   0.20%  -0.45%   0.34%

 1967-3   0.24%  -0.10%  -0.25%   0.67%   1.04%   1.59%

 1971-3  -0.45%   0.26%  -0.07%  -0.19%  -0.47%  -0.93%

 1975-3   0.15%  -0.61%  -0.95%  -0.26%   0.09%  -1.58%

 1979-3   0.88%   0.07%   0.45%   0.84%   0.11%   2.34%


 Avg      0.26%  -0.04%  -0.18%   0.25%   0.06%   0.36%


 1983-3   0.86%  -0.21%   0.37%   0.47%   0.01%   1.49%

 1987-3  -0.19%  -1.74%   0.46%  -1.35%  -0.46%  -3.27%

 1991-3   0.48%   0.90%   0.09%  -0.24%  -2.00%  -0.77%

 1995-3  -0.51%  -1.69%   0.12%   0.25%   0.05%  -1.78%

 1999-3  -0.05%   2.00%  -0.73%   2.00%   0.66%   3.88%


 Avg      0.12%  -0.15%   0.06%   0.23%  -0.35%  -0.09%


 2003-3  -1.07%  -1.46%   0.95%  -0.93%   0.64%  -1.88%

 2007-3  -1.67%   2.00%  -1.10%  -0.98%   0.72%  -1.02%

 2011-3  -0.80%   1.09%  -1.73%  -1.96%  -0.60%  -4.00%

 2015-3   1.15%   0.03%   1.79%  -0.03%   0.62%   3.55%

 2019-3  -0.13%   0.26%  -0.05%  -0.04%   0.73%   0.77%


 Avg     -0.50%   0.38%  -0.03%  -0.79%   0.42%  -0.51%


OTC summary for PY3 1963 - 2019 

 Avg     -0.04%   0.06%  -0.05%  -0.10%   0.04%  -0.08%

 Win%       47%     60%     47%     40%     67%     47%


OTC summary for all years 1963 - 2022

 Avg     -0.14%   0.03%  -0.03%   0.14%   0.03%   0.05%

 Win%       44%     56%     52%     57%     55%     55%


SPX PY3

 Year       Mon     Tue     Wed    Thur    Fri    Totals

 1955-3   2.00%  -0.43%  -0.65%  -0.70%  -0.11%   0.11%

 1959-3  -1.11%   0.28%   1.08%  -0.09%   0.05%   0.22%


 1963-3   0.22%  -0.39%   0.08%  -0.46%  -0.82%  -1.38%

 1967-3  -0.26%  -0.63%   0.40%   0.92%   0.24%   0.67%

 1971-3  -0.34%   0.98%   0.15%  -0.78%  -0.56%  -0.55%

 1975-3   0.54%  -0.50%  -1.12%  -0.38%  -0.12%  -1.59%

 1979-3   1.97%  -0.55%   0.44%   0.72%  -0.33%   2.25%


 Avg      0.43%  -0.22%  -0.01%   0.00%  -0.32%  -0.12%


 1983-3   0.17%  -0.73%   0.44%   0.03%  -0.63%  -0.72%

 1987-3   0.46%  -1.51%   1.03%  -2.00%   0.81%  -1.21%

 1991-3   0.06%   0.92%   0.17%  -0.07%  -2.00%  -0.92%

 1995-3  -0.07%  -0.51%   0.79%   0.57%   0.46%   1.24%

 1999-3  -0.12%   1.84%  -0.66%   1.01%  -0.21%   1.86%


 Avg      0.10%   0.00%   0.35%  -0.09%  -0.31%   0.05%


 2003-3  -0.64%  -0.91%   0.80%  -0.84%   0.16%  -1.43%

 2007-3  -1.00%   2.00%  -0.71%  -1.32%   0.52%  -0.50%

 2011-3  -0.96%   0.48%  -1.66%  -1.68%  -0.04%  -3.85%

 2015-3   1.49%  -0.13%   1.62%  -0.11%   0.38%   3.24%

 2019-3  -0.20%   0.16%   0.07%   0.08%   0.77%   0.88%


 Avg     -0.26%   0.32%   0.02%  -0.77%   0.36%  -0.33%


SPX summary for PY3 1955 - 2019

 Avg      0.13%   0.02%   0.13%  -0.30%  -0.08%  -0.10%

 Win%       47%     41%     71%     35%     47%     47%


SPX summary for all years 1953 - 2022

 Avg     -0.02%   0.01%  -0.02%   0.04%   0.09%   0.10%

 Win%       46%     47%     57%     53%     61%     50%

Conclusion

The market is a bit overbought and Seasonality is modestly negative.

The strongest sectors last week were Technology and Banks while the weakest were Precious Metals and Energy (for the second week).

I expect the major averages to be lower on Friday November 17 than they were on Friday November 10. 

Last week the Russell 2000 was down while the other major indices were up; so I am calling last week's positive forecast a tie.

More By This Author: