The good news is:The market had another good week. The NegativesThe market is overbought.All of the major indices are up close to 10% this November.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 while the SPX is less than 1% off its high for the year. A new SPX high for the year is likely to occur next week and it will be seriously unconfirmed by NY NH. 
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 
The PositivesThe 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 finished the week a hair below the neutral line and will likely rise above it as of next Monday’s close. 
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 continued to move deeper into positive territory. 
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 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. Ditto NY NL.
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. 
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 positive. 
SeasonalityNext week includes the last 4 trading days of November and the first day of December 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 1928 to 2022. There are summaries for both the 3rd year of the Presidential Cycle and all years combined. Average returns for the coming week have been positive by all measures and stronger during the 3rd year of the Presidential Cycle than other years. Report for the last 4 days of November and the first day of December.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 Day1 Totals 1963-3 -1.20% 5 -1.48% 2 0.97% 3 0.09% 5 0.70% 1 -0.93% 1967-3 0.63% 1 0.22% 2 0.95% 3 1.00% 4 0.74% 5 3.55% 1971-3 0.09% 3 1.24% 5 1.42% 1 0.86% 2 1.81% 3 5.41% 1975-3 0.23% 1 0.33% 2 0.49% 3 0.31% 5 -0.18% 1 1.18% 1979-3 0.42% 2 0.69% 3 0.44% 4 0.07% 5 -0.28% 1 1.34% Avg 0.03% 0.20% 0.85% 0.47% 0.56% 2.11% 1983-3 0.28% 5 -0.36% 1 0.40% 2 -0.02% 3 0.14% 4 0.49% 1987-3 1.13% 2 0.35% 3 -0.41% 5 -2.00% 1 0.03% 2 -0.90% 1991-3 -0.68% 1 -0.12% 2 0.11% 3 0.21% 5 1.34% 1 0.85% 1995-3 -0.09% 1 2.00% 2 0.71% 3 0.15% 4 -0.37% 5 2.41% 1999-3 2.00% 3 0.80% 5 -0.77% 1 -2.00% 2 0.52% 3 0.56% Avg 0.53% 0.53% 0.01% -0.72% 0.33% 0.68% 2003-3 2.00% 1 -0.21% 2 0.53% 3 0.36% 5 1.51% 1 4.18% 2007-3 1.57% 2 2.00% 3 0.20% 4 -0.27% 5 -0.90% 1 2.60% 2011-3 -0.75% 5 2.00% 1 -0.47% 2 2.00% 3 0.22% 4 3.00% 2015-3 0.01% 2 0.26% 3 0.22% 5 -0.37% 1 0.93% 2 1.05% 2019-3 1.32% 1 0.18% 2 0.66% 3 -0.46% 5 -1.12% 1 0.58% Avg 0.83% 0.85% 0.23% 0.25% 0.13% 2.28% OTC summary for PY3 1963 – 2019Averages 0.46% 0.53% 0.36% 0.00% 0.34% 1.69%% Winners 73% 73% 80% 67% 67% 87%MDD 11/30/1999 2.75% — 11/26/1963 2.67% — 11/30/1987 2.40% OTC summary for all years 1963 – 2022Averages 0.18% 0.13% 0.29% 0.05% 0.23% 0.87%% Winners 59% 66% 68% 62% 60% 73%MDD 11/30/2000 5.73% — 12/3/1973 4.25% — 12/1/2021 3.50% SPX PY3 Day4 Day3 Day2 Day1 Day1 Totals 1931-3 -2.00% 3 -2.00% 5 -1.50% 6 2.00% 1 -1.26% 2 -4.77% 1935-3 -1.44% 2 0.77% 3 -1.15% 5 0.08% 6 -1.54% 1 -3.28% 1939-3 0.08% 1 -0.40% 2 -1.12% 3 -1.05% 4 0.74% 5 -1.76% 1943-3 -0.80% 5 -0.27% 6 -1.17% 1 0.27% 2 1.00% 3 -0.97% 1947-3 -0.26% 2 -0.46% 3 -0.99% 5 0.07% 6 0.53% 1 -1.11% 1951-3 1.03% 2 -0.22% 3 0.27% 4 0.93% 5 0.26% 6 2.26% 1955-3 -0.09% 5 -0.66% 1 0.40% 2 -0.11% 3 -0.35% 4 -0.81% 1959-3 0.47% 2 0.16% 3 0.45% 5 1.01% 1 0.72% 2 2.81% Avg 0.07% -0.29% -0.21% 0.43% 0.43% 0.44% 1963-3 -2.00% 5 2.00% 2 -0.18% 3 1.36% 5 0.59% 1 1.76% 1967-3 0.29% 1 0.32% 2 0.00% 3 -0.50% 4 0.53% 5 0.64% 1971-3 0.19% 3 1.78% 5 1.60% 1 0.62% 2 1.65% 3 5.84% 1975-3 0.19% 1 1.13% 2 0.25% 3 0.33% 5 -0.62% 1 1.27% 1979-3 -0.39% 2 0.37% 3 0.04% 4 -0.61% 5 -0.31% 1 -0.91% Avg -0.35% 1.12% 0.34% 0.24% 0.37% 1.72% 1983-3 0.13% 5 -0.38% 1 0.82% 2 -0.90% 3 0.05% 4 -0.27% 1987-3 1.40% 2 -0.93% 3 -1.54% 5 -2.00% 1 0.74% 2 -2.33% 1991-3 -0.21% 1 0.70% 2 -0.37% 3 -0.35% 5 1.65% 1 1.41% 1995-3 0.23% 1 0.85% 2 0.20% 3 -0.37% 4 0.27% 5 1.17% 1999-3 0.88% 3 -0.04% 5 -0.61% 1 -1.34% 2 0.62% 3 -0.48% Avg 0.49% 0.04% -0.30% -0.99% 0.66% -0.10% 2003-3 1.62% 1 0.17% 2 0.43% 3 -0.02% 5 1.13% 1 3.33% 2007-3 1.49% 2 2.00% 3 0.05% 4 0.78% 5 -0.59% 1 3.73% 2011-3 -0.27% 5 2.00% 1 0.22% 2 2.00% 3 -0.19% 4 3.76% 2015-3 0.12% 2 -0.01% 3 0.06% 5 -0.46% 1 1.07% 2 0.77% 2019-3 0.75% 1 0.22% 2 0.42% 3 -0.40% 5 -0.86% 1 0.12% Avg 0.74% 0.88% 0.24% 0.38% 0.11% 2.34% SPX summary for PY3 1931 – 2019Averages 0.06% 0.31% -0.15% 0.06% 0.25% 0.53%% Winners 61% 57% 57% 48% 65% 57%MDD 11/28/1931 5.40% — 11/30/1987 4.41% — 12/2/1935 3.26% SPX summary for all years 1928 – 2022Averages 0.10% -0.01% 0.03% 0.16% 0.06% 0.33%% Winners 62% 51% 56% 54% 48% 56%MDD 11/28/1931 5.40% — 11/30/1987 4.41% — 11/28/1930 3.93% DecemberSince 1963, over all years, the OTC in December has been up 62% of the time with an average gain of 1.5%. During the 3rd year of the Presidential Cycle December has been up 60% time with an average gain of 4.1%. The best December for the OTC was 1999 (+22.0%), the worst, 2002 (-9.7%).The average month has 21 trading days. The chart below has been calculated by averaging the daily percentage change of the OTC for each of the 1st 11 trading days and each of the last 10. In months when there were more than 21 trading days some of the days in the middle were not counted. In months when there were less than 21 trading days some of the days in the middle of the month were counted twice. Dashed vertical lines have been drawn after the 1st trading day and at 5 trading day intervals after that. The line is solid on the 11th trading day, the dividing point.In the chart below the blue line shows the average of the OTC in December over all years since 1963 while the black line shows the average during the 3rd year of the Presidential Cycle over the same period. 
Since 1928 the SPX has been up 73% of the time in December with an average gain of 1.3%. During the 3rd year of the Presidential Cycle the SPX has been up 74% of the time with an average gain of 2.2%. The best December for the SPX was 1991 (+11.2%) the worst, 1931 (-14.5%).The chart below is similar to the one above except it shows the daily average performance over all years for the SPX in December in red and the performance during the 3rd year of the Presidential Cycle in black. 
Since 1979 the Russell 2000 (R2K) has been up 75% of the time in December with an average gain of 2.1%. During the 3rd year of the Presidential Cycle the R2K has been up 73% of the time with an average gain of 3.0%. The best December for the R2K, 1999 (+11.2%), the worst, 2018 (-12.0%)The chart below is similar to those above except it shows the daily performance over all years of the R2K in December in magenta and the performance during the 3rd year of the Presidential Cycle in black. 
Since 1885 the Dow Jones Industrial Average (DJIA) has been up 69% of the time in December with an average gain of 1.2%. During the 3rd year of the Presidential Cycle the DJIA has been up 79% of the time in December with an average gain of 1.5%. The best December for the DJIA, 1903 (+10.8%), the worst, 1931 (-17.0%)The chart below is similar to those above except it shows the daily performance over all years of the DJIA in December in grey and the performance during the 3rd year of the Presidential Cycle in black. 
ConclusionThe market is over bought with a nearly 10% gain in November alone.Prices have outrun the breadth indicators to the upside.Seasonality for next week is positive.The strongest sectors last week were Technology (for the 3rd week) and Precious metals (up from the bottom last week while the weakest were Banks and Energy (for the 3rd week).I expect the major averages to be higher on Friday December 1 than they were on Friday November 24. More By This Author:Technical Market Report – Saturday, November 18Technical Market Report For November 11, 2023Technical Market Report – Saturday, November 4
