Technical Market Report - Monday, December 3

The good news is:

Seasonally this rally has another week to go.

 

The Negatives

New lows increased Friday which was an up day for all of the major averages.

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 is not closely following the sharp upward movement in prices. 

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 in only slightly better than NY HL Ratio.

The Positives

Seasonality remains positive for another week.

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).

This is not the best looking chart. During the rally at the end of October, OTC NL moved sharply upward. During last weeks strong rally in prices, OTC NL was lacking, but it did move upward.

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.

Prices moved strongly upward while NY NL was nearly flat.

Seasonality

Next week includes the first 5 trading days 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 1928 to 2018. 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.

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