Technical Market Report - Monday, December 10

The good news is:  Last weeks price lows were unconfirmed by the breadth indicators.

The Negatives

New lows remained at dangerous levels. Seasonality is mixed to weak for the next 2 weeks.

The first chart covers the past 6 months showing the S&P 500 (SPX) in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.  Dashed vertical lines have been drawn on the first trading day of the month.  Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

 NY HL Ratio returned to an extreme negative level, although, a little higher than we have seen in the past month or so.  

The next chart is similar to the one above except it shows the Nasdaq composite (OTC) in blue and OTC HL Ratio, in red, has been calculated with Nasdaq data.

OTC HL Ratio is a little weaker than NY HL Ratio.

The Positives

New lows decreased Friday which was a down day for all of the major averages.
The market is oversold.

The next chart covers the past 6 months showing the OTC in blue and a 10% trend of Nasdaq new lows (OTC NL) in brown.  OTC NL has been plotted on an inverted Y axis so diminishing numbers of new lows move the indicator upward (up is good).

The OTC is retesting its low of 2 weeks ago while OTC NL is far from confirming a new low if one is reached.

The next chart is similar to the one above except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.
The SPX did hit a new low which was unconfirmed by NY NL.

Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of December 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 2018 while SPX data runs from 1953 to 2018. 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 modest and mixed.

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