Technical Market Report For December 24, 2022
The good news is:
- Seasonality is positive for the coming week.
The Negatives
The first chart covers the past 6 months showing the Nasdaq composite (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 vertical lines have been drawn on the 1st trading day of each month. 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 fell deeper into negative territory.
The next chart is similar to the first one except it shows the S&P 500 (SPX) in red and NY HL ratio, in blue, has been calculated with NYSE data.
NY HL ratio remained in negative territory.
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 continued its fall.
The next chart is similar to the above except it shows the SPX in red and NY NL in blue has been calculated with NYSE data.
NY NL continued its fall.
The next chart covers the last 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in green.
OTC NH continued to move downward.
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 ditto.
The Positives
Seasonality is positive for the last 4 trading days of the year.
Seasonality
Next week includes the last 4 trading days of the 2nd 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 2021 while SPX data runs from 1928 to 2021. There are summaries for both the 2nd year of the Presidential Cycle and all years combined.
Average returns for the coming week have been positive by all measures..
Report for the last 4 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.
OTC Presidential Year 2 (PY2)
Day4 Day3 Day2 Day1 Totals
1966-2 0.04% 2 -0.09% 3 0.07% 4 -0.14% 5 -0.12%
1970-2 0.44% 1 0.35% 2 0.57% 3 0.12% 4 1.49%
1974-2 0.99% 4 -0.24% 5 0.07% 1 1.77% 2 2.59%
1978-2 0.64% 2 -0.30% 3 -0.03% 4 0.58% 5 0.90%
1982-2 -0.43% 2 0.03% 3 -0.43% 4 0.49% 5 -0.34%
1986-2 0.11% 5 -0.57% 1 -0.20% 2 0.43% 3 -0.22%
1990-2 0.00% 3 -0.36% 4 0.04% 5 0.71% 1 0.39%
1994-2 0.54% 2 -0.50% 3 0.95% 4 0.32% 5 1.32%
1998-2 0.80% 1 0.04% 2 -0.65% 3 1.19% 4 1.38%
Avg 0.20% -0.27% -0.06% 0.63% 0.50%
2002-2 -0.33% 4 -1.43% 5 -0.65% 1 -0.30% 2 -2.72%
2006-2 0.51% 2 0.73% 3 -0.23% 4 -0.42% 5 0.59%
2010-2 -0.16% 2 0.15% 3 -0.15% 4 -0.38% 5 -0.54%
2014-2 0.70% 5 0.00% 1 -0.61% 2 -0.87% 3 -0.78%
2018-2 5.84% 3 0.38% 4 0.08% 5 0.77% 1 7.07%
Avg 1.31% -0.03% -0.31% -0.24% 0.72%
OTC summary for PY2 1966 - 2018
Averages 0.69% -0.13% -0.08% 0.31% 0.79%
% Winners 71% 50% 43% 64% 57%
MDD 12/31/2007 2.65% -- 12/29/1987 2.30% -- 12/31/2015 1.97%
OTC summary for all years 1963 - 2018
Averages 0.28% 0.07% 0.20% 0.23% 0.81%
% Winners 69% 50% 60% 69% 67%
MDD 12/29/2000 3.41% -- 12/31/2002 2.69% -- 12/31/2007 2.65%
SPX PY2
Day4 Day3 Day2 Day1 Totals
1930-2 -0.61% 6 -0.27% 1 2.31% 2 1.86% 3 3.29%
1934-2 0.11% 4 3.75% 5 0.32% 6 0.64% 1 4.81%
1938-2 1.18% 3 1.94% 4 0.08% 5 0.53% 6 3.73%
1942-2 -1.13% 1 0.00% 2 1.14% 3 0.10% 4 0.12%
1946-2 -0.13% 5 0.20% 6 -0.33% 1 0.86% 2 0.59%
1950-2 1.91% 3 0.39% 4 0.25% 5 -0.10% 6 2.45%
1954-2 1.03% 2 0.87% 3 0.00% 4 0.67% 5 2.57%
1958-2 1.29% 3 1.16% 1 0.35% 2 0.51% 3 3.31%
Avg 0.59% 0.53% 0.28% 0.41% 1.81%
1962-2 0.62% 3 -0.14% 4 0.05% 5 0.22% 1 0.75%
1966-2 -0.58% 2 -0.48% 3 -0.30% 4 -0.05% 5 -1.41%
1970-2 0.53% 1 1.09% 2 0.21% 3 -0.13% 4 1.69%
1974-2 0.84% 4 -0.44% 5 0.03% 1 2.08% 2 2.51%
1978-2 1.26% 2 -0.88% 3 -0.39% 4 -0.18% 5 -0.20%
Avg 0.53% -0.17% -0.08% 0.39% 0.67%
1982-2 -0.99% 2 0.33% 3 -0.64% 4 0.22% 5 -1.08%
1986-2 0.07% 5 -0.91% 1 -0.53% 2 -0.49% 3 -1.87%
1990-2 0.29% 3 -0.77% 4 0.13% 5 0.46% 1 0.10%
1994-2 0.57% 2 -0.35% 3 0.07% 4 -0.41% 5 -0.12%
1998-2 -0.07% 1 1.33% 2 -0.80% 3 -0.22% 4 0.25%
Avg -0.03% -0.07% -0.35% -0.09% -0.54%
2002-2 -0.31% 4 -1.60% 5 0.46% 1 0.05% 2 -1.41%
2006-2 0.44% 2 0.70% 3 -0.15% 4 -0.45% 5 0.54%
2010-2 0.08% 2 0.10% 3 -0.15% 4 0.07% 5 0.10%
2014-2 0.33% 5 0.09% 1 -0.49% 2 -1.03% 3 -1.10%
2018-2 4.96% 3 0.86% 4 -0.12% 5 0.85% 1 6.54%
Avg 1.10% 0.03% -0.09% -0.10% 0.93%
SPX summary for PY2 1930 - 2018
Averages 0.51% 0.30% 0.06% 0.26% 1.14%
% Winners 70% 57% 52% 61% 70%
MDD 12/29/1987 2.95% -- 12/28/1931 2.51% -- 12/31/2007 1.96%
SPX summary for all years 1928 - 2021
Averages 0.19% 0.27% 0.39% 0.17% 1.00%
% Winners 64% 59% 69% 63% 73%
MDD 12/28/1937 3.55% -- 12/29/1987 2.95% -- 12/28/1931 2.51%
Conclusion
The breadth indicators are awful, however, next week has had a positive seasonal bias with low volume.
The strongest sectors last week were Precious Metals and Energy (up after 6 weeks at the bottom) while the weakest were Transportation and Technology..
I expect the major averages to be higher on Friday, December 30 than they were on Friday, December 23.
Last week the Dow Jones Industrial Average was up while all of the other major averages were down; so I am calling last week's negative forecast a tie.
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