Technical Market Report - Saturday, November 18
The good news is:
- The market had a good week.
The Negatives
The first chart covers the last 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.
NY NH is showing a little bit of life, but, if there is a new index high in the near future, it will be seriously unconfirmed.
(Click on image to enlarge)
The next chart is similar to the one above except it shows the NASDAQ composite (OTC) in blue and OTC NH, in green, has been calculated with NASDAQ data.
Ditto OTC NH
(Click on image to enlarge)
The next chart covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of NASDAQ new highs divided by new highs + new lows (OTC HL Ratio), in red. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level (equal numbers of new highs and new lows).
OTC HL Ratio came alive for a couple days last week, but never went positive.
(Click on image to enlarge)
The Positives
The next chart is similar to the one above except it shows the SPX in red and NY HL ratio, in blue, has been calculated with NYSE data.
NY HL ratio popped up into positive territory again, it will be interesting to watch next week.
(Click on image to enlarge)
The next chart covers the last 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown. OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good).
OTC NL resumed its upward move.
(Click on image to enlarge)
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.
NY NL continued the upward move.
(Click on image to enlarge)
Summation indices are running totals of oscillator values.
Short term momentum indicators applied to summation indices make them nearly binary.
The next chart covers the past 6 months showing the SPX in red and momentum of summation indices of oscillators of advancing and declining issues, new highs and new lows and upside and downside volume on the NYSE.
NYSE SI’s are all positive.
(Click on image to enlarge)
The next chart is similar to the one above, except it shows the OTC, in blue, as the index and the SI’s have been generated from NASDAQ breadth data.
All of the OTC SI’s are moving upward.
(Click on image to enlarge)
Seasonality
Next week includes the 3 trading days prior to Thanksgiving and the Friday after Thanksgiving during the 3rd 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 2022 while SPX data runs from 1953 to 2022. 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.
Average returns for the coming week have been positive by all measures, but a little weaker during the 3rd year of the Presidential Cycle than other years.
Report for the 3 days before Thanksgiving and 1 day after.
Day1 = the day after
The number following the year represents its position in the Presidential Cycle.
The number following the daily return represents the day of the week;
1 = Monday, 2 = Tuesday etc.
OTC Presidential Year 3 (PY3)
Day4 Day3 Day2 Day1 Totals
1963-3 -1.20% 5 -1.48% 2 0.97% 3 0.09% 5 -1.62%
1967-3 -1.99% 1 1.11% 2 1.62% 3 1.02% 5 1.76%
1971-3 -1.13% 1 -1.45% 2 0.09% 3 1.24% 5 -1.26%
1975-3 0.23% 1 0.33% 2 0.49% 3 0.31% 5 1.36%
1979-3 0.65% 1 -0.34% 2 -0.44% 3 0.70% 5 0.57%
Avg -0.69% -0.37% 0.54% 0.67% 0.16%
1983-3 0.63% 1 0.53% 2 0.05% 3 0.28% 5 1.49%
1987-3 0.20% 1 1.13% 2 0.35% 3 -0.41% 5 1.27%
1991-3 -0.68% 1 -0.12% 2 0.11% 3 0.21% 5 -0.48%
1995-3 -1.48% 1 -0.44% 2 -0.37% 3 0.88% 5 -1.41%
1999-3 0.69% 1 -1.46% 2 2.00% 3 0.80% 5 2.02%
Avg -0.13% -0.07% 0.43% 0.35% 0.58%
2003-3 2.00% 1 -0.21% 2 0.53% 3 0.36% 5 2.67%
2007-3 -1.66% 1 0.13% 2 -1.33% 3 1.34% 5 -1.52%
2011-3 -1.92% 1 -0.07% 2 -2.00% 3 -0.75% 5 -4.75%
2015-3 -0.05% 1 0.01% 2 0.26% 3 0.22% 5 0.44%
2019-3 1.32% 1 0.18% 2 0.66% 3 -0.46% 5 1.71%
Avg -0.06% 0.01% -0.38% 0.14% -0.29%
OTC summary for PY3 1963 - 2019
Averages -0.29% -0.14% 0.20% 0.39% 0.15%
%Winners 47% 47% 73% 80% 60%
MDD 11/25/2011 4.68% -- 11/21/2007 2.85% -- 11/26/1963 2.67%
OTC summary for all years 1963 - 2022
Averages -0.09% -0.11% 0.35% 0.32% 0.46%
% Winners 50% 56% 78% 76% 67%
SPX PY3
Day4 Day3 Day2 Day1 Totals
1955-3 -0.70% 1 0.97% 2 0.13% 3 -0.09% 5 0.31%
1959-3 0.19% 1 0.47% 2 0.16% 3 0.45% 5 1.28%
1963-3 -2.00% 5 2.00% 2 -0.18% 3 1.36% 5 1.18%
1967-3 -1.26% 1 1.58% 2 0.59% 3 0.27% 5 1.18%
1971-3 -0.90% 1 -0.69% 2 0.19% 3 1.78% 5 0.38%
1975-3 0.19% 1 1.13% 2 0.25% 3 0.33% 5 1.90%
1979-3 0.42% 1 -0.52% 2 0.19% 3 0.75% 5 0.85%
Avg -0.71% 0.70% 0.21% 0.90% 1.10%
1983-3 0.58% 1 0.48% 2 0.07% 3 0.13% 5 1.26%
1987-3 0.41% 1 1.40% 2 -0.93% 3 -1.54% 5 -0.66%
1991-3 -0.21% 1 0.70% 2 -0.37% 3 -0.35% 5 -0.24%
1995-3 -0.54% 1 0.57% 2 -0.31% 3 0.26% 5 -0.01%
1999-3 -0.08% 1 -1.14% 2 0.88% 3 -0.04% 5 -0.37%
Avg 0.03% 0.40% -0.13% -0.31% 0.00%
2003-3 1.62% 1 0.17% 2 0.43% 3 -0.02% 5 2.20%
2007-3 -1.75% 1 0.45% 2 -1.59% 3 1.69% 5 -1.20%
2011-3 -1.86% 1 -0.41% 2 -2.00% 3 -0.27% 5 -4.55%
2015-3 -0.12% 1 0.12% 2 -0.01% 3 0.06% 5 0.05%
2019-3 0.75% 1 0.22% 2 0.42% 3 -0.40% 5 0.99%
Avg -0.27% 0.11% -0.55% 0.21% -0.50%
SPX summary for PY3 1963 - 2019
Averages -0.31% 0.44% -0.12% 0.26% 0.27%
%Winners 41% 76% 59% 59% 65%
MDD 11/25/2011 4.48% -- 11/21/2007 2.88% -- 11/27/1987 2.46%
SPX summary for all years 1953 - 2022
Averages -0.11% 0.07% 0.29% 0.29% 0.54%
% Winners 45% 61% 79% 70% 69%
Money supply (M2) and Interest Rates
The following charts were supplied by Gordon Harms.
The first chart, made with FastTrack, covers the past 5 years showing the SPX in red and M2 money supply in green.
Money supply has remained constant for several months.
(Click on image to enlarge)
Treasury rates at their close last Friday and their changes from last month:
2yr yield 4.905% down from 5.050%
5yr yield 4.444% down from 4.646%
10yr yield 4.440% down from 4.627%
30yr yield 4.592% down from 4.766%
Everything is inverted (shorter term maturities yield more than longer term maturities) except the 30 yr which is higher than the 5yr and 10 yr.
The next chart covers the past 15 months showing the 30 year yield over the 5 year yield on top, The 1, 2, 5, 10 & 30 year treasury rates in the middle group and the SPX with a 50 day simple moving average on the bottom.
(Click on image to enlarge)
Conclusion
The market had a good week, but it outran the breadth indicators to the upside. Seasonality for next week is modestly positive.
The strongest sectors last week were Technology and Banks (same as last week while the weakest were Precious metals and Energy (same as the last 2 weeks).
I expect the major averages to be higher on Friday November 24 than they were on Friday November 17.
Last weeks negative forecast was a miss.
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