The good news is:

• This seasonally strong period is scheduled to last another week.

 

The Negatives

The market is overbought.  Many of the indices have been up for 5 consecutive days.

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 1^st trading day of each month.  

OTC NH is not leading the index upward. 

 

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

New lows disappeared last week.

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 turned upward when new lows disappeared last week.

 

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 moved sharply upward into positive territory last week. 

 

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 also recovered nicely.
 

Seasonality

Next week includes the first 5 trading of December during the 1^st year of the Presidential Cycle. The tables below show the daily performance on a percentage basis of both the OTC and SPX.  

OTC data covers the period from 1963 to 2024 while SPX data runs from 1928 to 2024.  There are summaries for both the 1^st year of the Presidential Cycle and all years combined

Seasonality for the coming week has been positive by all measures.

 

Report for the first 5 days of December.

The number following the year represents its position in the Presidential Cycle. The number following the daily return represents the day of the week;

1 = Monday, 2 = Tuesday etc.

 

Presidential Year 1 (PY1)

               Day1      Day2      Day3      Day4      Day5      Totals

 1965-1       0.52% 3   0.21% 4   0.43% 5  -0.30% 1   0.14% 2     1.00%

 1969-1       0.16% 1  -0.55% 2  -0.23% 3  -0.97% 4  -0.07% 5    -1.65%

 1973-1      -1.65% 1  -0.45% 2  -2.00% 3   1.72% 4   1.15% 5    -1.22%

 1977-1       0.51% 4   0.41% 5   0.05% 1  -1.13% 2  -0.12% 3    -0.28%

 1981-1      -0.12% 2  -0.39% 3  -0.22% 4   0.49% 5  -0.58% 1    -0.82%

 

 Avg         -0.11%    -0.15%    -0.40%    -0.04%     0.11%      -0.60%

 

 1985-1      -0.32% 1   0.06% 2   1.13% 3   0.48% 4  -0.50% 5     0.85%

 1989-1       0.22% 5   0.26% 1   0.06% 2  -0.41% 3  -0.08% 4     0.05%

 1993-1       1.25% 3   0.38% 4   0.72% 5  -0.15% 1  -0.23% 2     1.98%

 1997-1       1.88% 1  -1.49% 2   0.54% 3  -0.11% 4   1.27% 5     2.10%

 2001-1      -1.33% 1   3.06% 2   4.27% 3   0.36% 4  -1.61% 5     4.75%

 

 Avg          0.34%     0.45%     1.34%     0.04%    -0.23%       1.94%

 

 2005-1       1.54% 4   0.27% 5  -0.69% 1   0.14% 2  -0.39% 3     0.87%

 2009-1       1.46% 2   0.42% 3  -0.54% 4   0.98% 5  -0.22% 1     2.09%

 2013-1      -0.36% 1  -0.20% 2   0.02% 3  -0.12% 4   0.73% 5     0.07%

 2017-1      -0.38% 5  -1.05% 1  -0.19% 2   0.21% 3   0.54% 4    -0.88%

 2021-1      -1.83% 3   0.83% 4  -1.92% 5   0.93% 1   3.03% 2     1.04%

 

 Avg          0.09%     0.06%    -0.67%     0.43%     0.74%       0.64%

 

OTC summary for PY1 1965 - 2021

Averages      0.10%     0.12%     0.09%     0.14%     0.21%       0.66%

% Winners       53%       60%       53%       53%       40%         67%

MDD  12/5/1973  4.04% --  12/3/2021  2.91% --  12/5/1969  1.80%

 

OTC summary for all years 1963 - 2024

Averages      0.14%     0.08%     0.34%    -0.05%     0.14%       0.66%

% Winners       61%       58%       68%       55%       53%         58%

MDD 12/1/2008  8.95% --  12/6/1974  7.53% --  12/7/2018  6.35%

 

SPX PY1

               Day1      Day2      Day3      Day4      Day5      Totals

 1929-1       0.14% 1   3.34% 2   1.85% 3  -0.82% 4   2.65% 5     7.17%

 1933-1       0.30% 5   0.10% 6  -0.20% 1   3.03% 2  -0.69% 3     2.55%

 1937-1      -1.26% 3   2.01% 4   1.34% 5   0.09% 6  -1.94% 1     0.24%

 1941-1      -0.33% 1   2.09% 2   1.08% 3   0.21% 4  -0.64% 5     2.42%

 

 1945-1       0.58% 6   0.87% 1  -0.11% 2  -0.06% 3   0.52% 4     1.79%

 1949-1       0.56% 4   0.80% 5   0.80% 6   0.00% 1  -0.12% 2     2.04%

 1953-1       0.08% 2   0.69% 3   0.08% 4   0.04% 5  -0.12% 1     0.77%

 1957-1      -0.86% 1   0.02% 2   0.41% 3  -0.05% 4  -0.51% 5    -0.98%

 1961-1       0.64% 5   0.32% 1  -0.11% 2   0.08% 3  -0.40% 4     0.53%

 

 Avg          0.20%     0.54%     0.21%     0.00%    -0.13%       0.83%

 

 1965-1      -0.12% 3  -0.32% 4   0.07% 5  -0.75% 1   0.88% 2    -0.23%

 1969-1      -0.63% 1  -0.61% 2  -1.08% 3   0.33% 4  -0.24% 5    -2.23%

 1973-1      -2.15% 1  -0.33% 2  -1.53% 3   2.45% 4   2.21% 5     0.66%

 1977-1      -0.15% 4  -0.02% 5  -0.42% 1  -1.53% 2  -0.05% 3    -2.17%

 1981-1      -0.20% 2  -1.12% 3   0.34% 4   0.91% 5  -0.85% 1    -0.91%

 

 Avg         -0.65%    -0.48%    -0.52%     0.28%     0.39%      -0.98%

 

 1985-1      -0.85% 1   0.20% 2   1.68% 3  -0.17% 4  -0.44% 5     0.42%

 1989-1       1.34% 5   0.22% 1  -0.52% 2  -0.29% 3  -0.28% 4     0.47%

 1993-1       0.02% 3   0.26% 4   0.38% 5   0.33% 1   0.07% 2     1.07%

 1997-1       2.03% 1  -0.32% 2   0.52% 3  -0.37% 4   1.10% 5     2.96%

 2001-1      -0.84% 1   1.32% 2   2.23% 3  -0.28% 4  -0.75% 5     1.68%

 

 Avg          0.34%     0.34%     0.86%    -0.16%    -0.06%       1.32%

 

 2005-1       1.22% 4   0.03% 5  -0.24% 1   0.13% 2  -0.50% 3     0.64%

 2009-1       1.21% 2   0.03% 3  -0.84% 4   0.55% 5  -0.25% 1     0.71%

 2013-1      -0.27% 1  -0.32% 2  -0.13% 3  -0.43% 4   1.12% 5    -0.03%

 2017-1      -0.20% 5  -0.11% 1  -0.37% 2  -0.01% 3   0.29% 4    -0.40%

 2021-1      -1.18% 3   1.42% 4  -0.84% 5   1.17% 1   2.07% 2     2.64%

 

 Avg          0.15%     0.21%    -0.49%     0.28%     0.55%       0.71%

 

SPX summary for PY1 1929 - 2021

Averages     -0.04%     0.44%     0.18%     0.19%     0.13%       0.91%

% Winners       46%       67%       50%       50%       38%         71%

MDD  12/5/1973  3.96% --  12/3/1969  2.30% --  12/7/1977  2.16%

 

SPX summary for all years 1928 - 2024

Averages     -0.01%     0.09%     0.20%     0.06%     0.15%       0.49%

% Winners       49%       55%       60%       52%       51%         67%

MDD 12/1/2008  8.93% --  12/6/1974  7.09% --  12/6/1928  5.64%

 

December

Since 1963, over all years, the OTC in December has been up 63% of the time with an average gain of 1.6%.  During the 1^st year of the Presidential Cycle December has been up 60% time with an average gain of 0.8% The best December ever for the OTC was 1999 (+22.0%), the worst 2002 (-9.7%).

The average month has 21 trading days.  The chart below has been calculated by averaging the daily percentage change of the OTC for each of the 1^st 11 trading days and each of the last 10.  In months when there were more than 21 trading days some of the days in the middle were not counted.  In months when there were less than 21 trading days some of the days in the middle of the month were counted twice.  Dashed vertical lines have been drawn after the 1^st trading day and at 5 trading day intervals after that.  The line is solid on the 11^th trading day, the dividing point.

In the chart below the blue line shows the average of the OTC in December over all years since 1963 in blue while the green line shows the average during the 1^st year of the Presidential Cycle over the same period.

 

Since 1928 the SPX has been up 75% of the time in December with an average gain of 1.3%.  During the 1^st year of the Presidential Cycle the SPX has been up 75% of the time with an average gain of 0.6%.  The best December ever for the SPX was 1991 (+11.2%) the worst 1931 (-14.5%).

The chart below is similar to the one above except it shows the average daily performance over all years for the SPX in December in red and the performance during the 1^st year of the Presidential Cycle in green.

 

 

Since 1979 the Russell 2000 (R2K) has been up 74% of the time in December with an average gain of 2.1%.  During the 1^st year of the Presidential Cycle the R2K has been up 73% of the time in December with an average gain of 2.2%.  The best December ever for the R2K was 1999 (+11.2%), the worst 2002 (-5.7%).

The chart below is similar to those above except it shows the daily performance over all years of the R2K in December in magenta and the performance during the 1^st year of the Presidential Cycle in green.

 

Since 1885 the Dow Jones Industrial Average (DJIA) has been up 69% of the time in December with an average gain of 1.2%.  During the 1^st year of the Presidential Cycle the DJIA has been up 71% of the time in December with an average gain of 1.4%.  The best December ever for the DJIA was 1903 (+10.8%), the worst 1931 (-17.0%).

The chart below is similar to those above except it shows the daily performance over all years of the DJIA in December in grey and the performance during the 1^st year of the Presidential Cycle in green.

 

Conclusion

The market is overbought, however strong seasonality continues for another week.

The monthly charts above show a remarkable consistency over all periods with all of the indices.

The strongest sectors last week were Utilities and Health care (for the 3^rd week in a row) the weakest were Internet and Electronics (for the 4^th week in a row).

I expect the major averages to be higher on Friday December 5 than they were on Friday November 28.

 

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