Technical Market Report For November 19, 2022
Seasonally the week of Thanksgiving has been pretty good.
The Negatives
New lows have been decreasing on both of the major exchanges, however the numbers on the Nasdaq are still very high.
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 remained in negative territory.
The Positives
New lows were in mid double digits all week on the NYSE.
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 finished its second week in positive 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 resumed its upward move last week.
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 moved sharply upward as new lows remained in double digits.
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 fell last week, but remains near its highest high since early January.
The next chart is similar to the one above except it shows the SPX in red and NY NH has been calculated with NYSE data.
NY NH ditto.
Seasonality
Next week includes the 3 trading days prior to Thanksgiving and the Friday after during 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 1953 to 2021. There are summaries for both the 2nd 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 modestly positive by all measures.
Report for the 3 days before Thanksgiving and 1 day after. Day1 = the day after
OTC Presidential Year 2 (PY2)
Day4 Day3 Day2 Day1 Totals
1966-2 -0.31% 1 -1.00% 2 -0.42% 3 0.18% 5 -1.54%
1970-2 0.47% 1 0.28% 2 0.31% 3 0.25% 5 1.32%
1974-2 -0.63% 1 1.57% 2 0.24% 3 0.24% 5 1.42%
1978-2 0.72% 1 0.04% 2 0.71% 3 0.69% 5 2.17%
1982-2 -1.58% 1 -0.27% 2 0.76% 3 0.78% 5 -0.32%
1986-2 0.41% 1 0.24% 2 0.34% 3 0.40% 5 1.38%
1990-2 0.54% 1 -1.26% 2 0.14% 3 0.08% 5 -0.51%
1994-2 -0.91% 1 -2.18% 2 -0.61% 3 0.79% 5 -2.91%
1998-2 2.57% 1 -0.58% 2 0.88% 3 1.65% 5 4.52%
Avg 0.21% -0.81% 0.30% 0.74% 0.43%
2002-2 0.90% 1 -2.53% 2 3.01% 3 -0.62% 5 0.76%
2006-2 0.28% 1 0.09% 2 0.45% 3 -0.23% 5 0.59%
2010-2 0.55% 1 -1.46% 2 1.93% 3 -0.34% 5 0.68%
2014-2 0.89% 1 0.07% 2 0.61% 3 0.09% 5 1.66%
2018-2 -3.03% 1 -1.70% 2 0.92% 3 -0.48% 5 -4.29%
Avg -0.08% -1.11% 1.39% -0.31% -0.12%
OTC summary for PY2 1966 - 2018
Averages 0.06% -0.62% 0.66% 0.25% 0.35%
%Winners 64% 43% 86% 71% 64%
MDD 11/20/2018 4.68% -- 11/23/1994 3.66% -- 11/26/2002 2.53%
OTC summary for all years 1963 - 2021
Averages -0.05% -0.17% 0.36% 0.39% 0.52%
% Winners 51% 55% 78% 78% 66%
SPX PY2
Day4 Day3 Day2 Day1 Totals
1954-2 0.39% 1 1.34% 2 0.56% 3 0.96% 5 3.25%
1958-2 -2.60% 1 -0.60% 2 1.72% 3 1.12% 5 -0.36%
1962-2 -0.57% 1 1.05% 2 0.60% 3 1.20% 5 2.28%
1966-2 -1.44% 1 -0.52% 2 0.68% 3 0.80% 5 -0.49%
1970-2 0.62% 1 0.64% 2 0.37% 3 0.99% 5 2.61%
1974-2 -0.10% 1 0.93% 2 0.68% 3 0.04% 5 1.55%
1978-2 0.88% 1 -0.25% 2 0.49% 3 0.32% 5 1.45%
Avg -0.12% 0.37% 0.56% 0.67% 1.48%
1982-2 -2.04% 1 -0.96% 2 0.71% 3 0.75% 5 -1.54%
1986-2 0.65% 1 0.29% 2 0.24% 3 0.18% 5 1.36%
1990-2 0.70% 1 -1.26% 2 0.23% 3 -0.29% 5 -0.63%
1994-2 -0.69% 1 -1.79% 2 -0.03% 3 0.52% 5 -1.99%
1998-2 2.12% 1 -0.44% 2 0.33% 3 0.45% 5 2.47%
Avg 0.15% -0.83% 0.30% 0.32% -0.07%
2002-2 0.25% 1 -2.10% 2 2.80% 3 -0.27% 5 0.68%
2006-2 -0.05% 1 0.16% 2 0.23% 3 -0.37% 5 -0.02%
2010-2 -0.16% 1 -1.43% 2 1.49% 3 -0.75% 5 -0.84%
2014-2 0.29% 1 -0.12% 2 0.28% 3 -0.25% 5 0.20%
2018-2 -1.66% 1 -1.82% 2 0.30% 3 -0.66% 5 -3.83%
Avg -0.27% -1.06% 1.02% -0.46% -0.76%
SPX summary for PY2 1954 - 2018
Averages -0.20% -0.40% 0.69% 0.28% 0.36%
%Winners 47% 35% 94% 65% 53%
MDD 11/23/2018 3.79% -- 11/25/1958 3.19% -- 11/23/1982 2.98%
SPX summary for all years 1953 - 2021
Averages -0.08% 0.07% 0.33% 0.29% 0.61%
% Winners 46% 60% 78% 71% 69%
Conclusion
Last week was dreary compared to the previous week.
New lows declined to almost comfortable levels on the NYSE, but remained uncomfortably high on the Nasdaq.
The strongest sectors last week were Precious metals (for the 2nd week in a row) and Utilities while the weakest were Banks and Energy (for the 2nd week in a row).
I expect the major averages to be lower on Friday, November 25, than they were on Friday, November 18.
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