Technical Market Report For Saturday, Dec. 26

Technical market report for December 26, 2020

The good news is that the NASDAQ composite (OTC) and Russell 2000 (R2K) hit all time highs last week.

The Negatives

Negatives are minimal. Breadth has been strong, the secondaries have been leading the blue chips upward, and next week's seasonality is positive.

The Positives

New lows have been minimal.

The first chart covers the past six months, showing the 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, confirming the new OTC high.

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. Another new all time high for the SPX is expected.

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 continued holding above 90%.

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 also held above 90%.

Seasonality

Next week includes the last four trading days of the fourth 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 2019, while SPX data runs from 1928 to 2019. There are summaries for both the fourth year of the Presidential Cycle, and all years combined. Average returns for the coming week have been positive by all measures.

Note that the dating in this report is a little confusing. When the report routine was written, it was intended to show both the old and new year. Since the last date was in the new year, that was the year used in the report. In every case, the year shown in the report is misidentified as the following year. 

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