Technical Market Report For Saturday, Dec. 19

Technical market report for December 19, 2020

The good news is that all of the major averages closed at all time highs last Thursday.

The Negatives

Negatives are hard to find right now.

The Positives

Last week, the secondaries continued to lead the blue chips upward, new highs continued to expand, and new lows were nowhere to be found.

The first chart covers the past six 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. The OTC NH continued moving upward.

The next chart is similar to the first one, except it shows the S&P 500 (SPX) in red and the NY NH in green. The information has been calculated with NYSE data. The NY NH also continued moving upward last week.

The next chart covers the past six months, showing the SPX in red and a 40% trend (four-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. The NY HL Ratio is extremely strong, holding above 90% for a month.

The next chart is similar to the one above, except it shows the OTC in blue and the OTC HL Ratio in red. The information has been calculated with NASDAQ data. The OTC HL Ratio has also held above 90% for over a month.

Seasonality

Next week includes the four trading days prior to Christmas during the fourth year of the Presidential Cycle. The tables below show the daily change on a percentage basis for that period.

The OTC data covers the period from 1963 to 2019, while SPX data runs from 1953 to 2019. There are summaries for both the fourth year of the Presidential Cycle and all years combined. Prior to 1953, the market traded six days a week, so that data has been ignored. Average returns for the coming week have been modest and mixed. 

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