Technical Market Report - Monday, January 14

The good news is:  New lows have continued to disappear.

The Negatives

The market is overbought. All of the major indices are up 4% to 9% in the past 2 weeks.

The Positives

New lows have remained minimal. The secondaries continue to lead the way upward; the Russell 2000 (R2K) was up nearly 5% last week while the Dow Jones Industrial Average (DJIA), the laggard, was up a mere 2.4%.

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 each 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 continued to move sharply upward and reached positive territory for the 1st time since last October. 

The next chart is similar to the first 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 also moved into positive territory.

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).

OTC NL continued moving sharply 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.
NY NL also continued to move sharply upward.

Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of January 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 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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