Technical Market Report - Monday, November 12
The good news is:
November is not known as a month for disasters. The last really bad November was 2000 and before that 1973.
The Negatives
On the Nasdaq last week new highs never exceeded new lows. On the NYSE new highs exceeded new lows on Wednesday and Thursday. New lows remained at threatening levels on both exchanges all week.
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 horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.
NY HL Ratio almost hit the neutral line before turning downward on Friday.
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.
The recovery in OTC HL Ratio continued, but new highs never exceeded new lows during the week.
The Positives
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).
So far it looks like there was a bottom about 2 weeks ago. It will take more than 170 new lows to turn this indicator downward.
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.
It will take more than 186 new lows to turn this indicator downward.
Seasonality
Next week includes the 5 trading days prior to the 3rd Friday of November 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 7 days a week so that data has been ignored.
Average returns for the coming week have been modestly positive by all measures.
Report for the week before the 3rd Friday of November.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday through 3rd Friday.
OTC Presidential Year 2
Year Mon Tue Wed Thur Fri Totals
1966-2 0.18% -0.35% 0.90% -0.11% 0.75% 1.37%
1970-2 -1.11% -0.05% -0.07% -0.51% -0.09% -1.82%
1974-2 0.32% -2.04% -0.58% 0.09% -0.97% -3.18%
1978-2 -1.60% -1.88% 0.51% 0.69% 1.32% -0.96%
1982-2 -1.41% -1.91% 1.24% 0.67% 0.06% -1.35%
1986-2 -0.42% -1.25% -0.80% 0.68% 0.70% -1.09%
1990-2 2.78% 0.40% 1.13% -0.68% -1.02% 2.62%
1994-2 0.79% 0.11% 0.08% -0.49% -0.15% 0.34%
Avg 0.03% -0.90% 0.43% 0.18% 0.18% -0.09%
1998-2 0.74% 0.91% 1.00% 1.18% 0.44% 4.27%
2002-2 -2.95% 2.30% 0.87% 3.69% -0.03% 3.88%
2006-2 0.70% 1.01% 0.50% 0.26% -0.13% 2.33%
2010-2 -0.17% -1.75% 0.25% 1.55% 0.15% 0.02%
2014-2 -0.37% 0.67% -0.57% 0.56% 0.24% 0.53%
Avg -0.41% 0.63% 0.41% 1.45% 0.13% 2.21%
OTC summary for Presidential Year 2 1966 - 2014
Avg -0.19% -0.29% 0.34% 0.58% 0.10% 0.54%
Win% 46% 46% 69% 69% 54% 62%
OTC summary for all years 1963 - 2017
Avg -0.11% 0.12% -0.06% 0.05% 0.04% 0.04%
Win% 46% 55% 56% 56% 55% 58%
SPX Presidential Year 2
Year Mon Tue Wed Thur Fri Totals
1954-2 -0.21% 0.30% 0.18% -0.56% 0.03% -0.27%
1958-2 0.28% -0.21% 0.13% 0.02% -0.96% -0.73%
1962-2 1.38% -0.22% 1.18% -0.32% 0.32% 2.34%
1966-2 -0.70% 0.39% 0.83% -0.69% -0.66% -0.82%
1970-2 -0.16% 0.12% -0.66% 0.14% 0.98% 0.43%
1974-2 0.32% -1.97% -0.43% -0.40% -1.57% -4.05%
Avg 0.23% -0.38% 0.21% -0.25% -0.38% -0.57%
1978-2 -1.73% -0.69% 0.24% 1.08% 0.76% -0.34%
1982-2 -1.79% -1.17% 1.85% 0.30% -0.95% -1.77%
1986-2 -0.53% -2.64% 0.37% 1.85% 1.57% 0.62%
1990-2 1.83% -0.57% 0.86% -1.05% 0.03% 1.10%
1994-2 0.80% -0.22% 0.13% -0.44% -0.45% -0.19%
Avg -0.28% -1.06% 0.69% 0.35% 0.19% -0.12%
1998-2 0.91% 0.30% 0.46% 0.71% 0.95% 3.32%
2002-2 -2.07% 0.77% -0.05% 2.46% 0.61% 1.73%
2006-2 0.25% 0.64% 0.24% 0.23% 0.10% 1.46%
2010-2 -0.12% -1.62% 0.02% 1.54% 0.25% 0.07%
2014-2 0.07% 0.51% -0.15% 0.20% 0.52% 1.16%
Avg -0.19% 0.12% 0.10% 1.03% 0.49% 1.55%
SPX summary for Presidential Year 2 1954 - 2014
Avg -0.09% -0.39% 0.32% 0.32% 0.10% 0.25%
Win% 50% 44% 75% 63% 69% 56%
SPX summary for all years 1953 - 2017
Avg 0.00% 0.01% -0.04% -0.05% 0.13% 0.06%
Win% 48% 46% 60% 51% 61% 54%
Conclusion
The ‘buy the dippers’ came out in force 2 weeks ago, but looked exhausted last Friday.
I expect the major averages to be lower on Friday, November 16 than they were on Friday, November 9.