Technical Market Report - Monday, February 18

The good news is: The market has been following the seasonal average for the 3rd year of the Presidential Cycle pretty closely. The strongest part of this year lasts until July.

The Negatives

The market is overbought.

The Positives

New highs came alive last week. The secondaries were stronger than the blue chips. New lows have remained at benign levels.

The first chart covers the past 6 months showing the Nasdaq composite (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.

 OTC NH moved sharply upward after stalling the previous week.

The next chart is similar to the one above, except, it shows the S&P 500 (SPX) in red and NY NH, in green has been calculated with NYSE data.

 NY NH is also moving starply upward..

The next chart covers the past 6 months showing the 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 horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

NY HL Ratio is back above 90%, very strong. 

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 resumed its upward climb, finishing the week at a respectable 77%.

Seasonality

Next week includes the 4 trading days prior to the 4th Friday of February during the 3rd year of the Presidential Cycle. The tables below show the daily change, on a percentage basis for that period. The market will be closed Monday in observance of Presidents Day.

OTC data covers the period from 1963 to 2018 while SPX data runs from 1953 to 2018. There are summaries for both the 3rd 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.

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