Technical Market Report For Saturday, Jan. 2

The good news is the NASDAQ composite (OTC), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) hit all time highs last week.

The Negatives

Negatives are minimal. Market behavior has been pretty close to the Seasonal averages. The Russell 2000 (R2K) broke the pattern and finished the year down a little from its all time high, while the SPX and DJIA closed out the year at all time highs.

The Positives

New lows remained 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 confirmed the all time OTC high hit on Monday. This implies higher highs ahead.

The next chart is similar to the first one, except it shows the SPX in red and the NY NH in green. The information has been calculated with NYSE data. The NY NH failed to confirm the SPX all time high set last Friday, but only by a very small margin.

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 to hold above 90%, which is very strong.

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 first five trading days of the first year of the next 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 2020, while the SPX data runs from 1928 to 2020. There are summaries for both the first year of the Presidential Cycle and all years combined. Average returns for the coming week have been positive by all measures.

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