The good news is:Seasonally next week has been very strong. The NegativesThe 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 continued its decline.
The next chart is similar to the 1st one except it shows the OTC in blue and OTC NH in green has been calculated with NASDAQ data. OTC NH OTC NH also continued its decline.
The next chart covers the past 6 months showing the NASDAQ composite (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 reversed and moved sharply upward last week, but the actual numbers remained high.
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 stalled at a very negative level.
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 turned upward, but remained in negative territory.
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 turned upward, but remained in deeply negative territory. 
This one is an update of of a chart I showed last week.It shows The Russell 2000 (R2K) in pink and momentum of the 40% trend of the ratio of advancing issues divided by advancing issues + declining issues on the NYSE (NY AD Ratio 40% MoM 7) in green.NY AD Ratio 40% MoM 7 had turned upward at the end of last week and now, as of Friday, has turned downward.
The PositivesAside from Seasonality, positives are hard to find. SeasonalityNext week includes the last 2 trading days of 2024 and the first 2 trading days of 2025 which is the 1st 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 2023 while SPX data runs from 1928 to 2023. There are summaries for both the 4th year of the Presidential Cycle and all years combined. Seasonally next week has been very strong by all measures. Report includes the last 2 days of previous December and first 2 days of January.The year is the year of January, December is from the previous year.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. Presidential Year 1 (PY1) Day2 Day1 Day1 Day2 Totals 1965-1 -0.07% 3 0.27% 4 0.52% 1 -0.14% 2 0.59% 1969-1 -0.27% 1 -1.01% 2 0.09% 4 0.25% 5 -0.95% 1973-1 0.57% 3 1.36% 5 0.00% 2 0.67% 3 2.61% 1977-1 0.79% 4 0.86% 5 -0.19% 1 -0.48% 2 0.97% 1981-1 0.31% 2 0.77% 3 0.77% 5 0.30% 1 2.15% Avg 0.27% 0.45% 0.24% 0.12% 1.07% 1985-1 0.18% 5 0.52% 1 -0.58% 3 0.20% 4 0.31% 1989-1 0.61% 4 0.61% 5 -0.48% 2 0.84% 3 1.59% 1993-1 0.42% 3 0.76% 4 -0.76% 1 0.38% 2 0.80% 1997-1 -0.28% 1 0.25% 2 -0.80% 4 2.34% 5 1.51% 2001-1 0.72% 4 -3.41% 5 -7.23% 2 14.17% 3 4.25% Avg 0.33% -0.25% -1.97% 3.59% 1.69% 2005-1 0.06% 4 -0.13% 5 -1.07% 1 -2.06% 2 -3.20% 2009-1 2.67% 2 1.70% 3 3.50% 5 -0.26% 1 7.61% 2013-1 -0.86% 5 2.00% 1 3.07% 3 -0.38% 4 3.84% 2017-1 -0.12% 4 -0.90% 5 0.85% 2 0.88% 3 0.72% 2021-1 0.15% 3 0.14% 4 -1.47% 1 0.95% 2 -0.23% Avg 0.38% 0.56% 0.98% -0.17% 1.75% OTC summary for PY1 1965 – 2021Averages 0.33% 0.25% -0.25% 1.18% 1.51%% Winners 67% 73% 40% 67% 80%MDD 1/2/2001 10.40% — 1/4/2005 3.24% — 1/4/2021 1.47% OTC summary for all years 1963 – 2024Averages 0.23% 0.21% 0.20% 0.38% 1.02%% Winners 59% 66% 58% 61% 70%MDD 1/2/2001 10.40% — 1/4/2000 5.56% — 1/5/2016 4.24%
SPX PY1 Day2 Day1 Day1 Day2 Totals 1929-1 0.29% 6 1.25% 1 1.89% 3 0.20% 4 3.63% 1933-1 2.52% 5 -0.43% 6 -0.87% 2 4.69% 3 5.90% 1937-1 1.53% 3 -0.52% 4 -0.93% 6 -0.53% 1 -0.45% 1941-1 0.67% 1 0.09% 2 -0.95% 4 2.29% 5 2.11% 1945-1 1.37% 5 0.00% 6 0.38% 2 1.05% 3 2.80% 1949-1 0.00% 4 -0.52% 5 -1.64% 1 0.54% 2 -1.63% 1953-1 0.72% 2 -0.08% 3 -0.11% 5 0.45% 1 0.98% 1957-1 0.45% 5 0.24% 1 -1.01% 3 0.87% 4 0.55% 1961-1 0.47% 4 0.10% 5 -0.93% 2 1.37% 3 1.01% Avg 0.60% -0.05% -0.66% 0.86% 0.74% 1965-1 0.58% 3 0.53% 4 -0.61% 1 0.47% 2 0.98% 1969-1 -0.90% 1 0.06% 2 0.07% 4 0.06% 5 -0.71% 1973-1 0.54% 3 0.96% 5 0.89% 2 0.39% 3 2.78% 1977-1 0.51% 4 0.54% 5 -0.43% 1 -1.21% 2 -0.59% 1981-1 0.22% 2 0.32% 3 0.43% 5 1.20% 1 2.16% Avg 0.19% 0.48% 0.07% 0.18% 0.92% 1985-1 0.31% 5 0.59% 1 -1.12% 3 -0.48% 4 -0.70% 1989-1 0.84% 4 -0.60% 5 -0.87% 2 1.50% 3 0.86% 1993-1 0.19% 3 -0.71% 4 -0.08% 1 -0.24% 2 -0.83% 1997-1 -0.39% 1 -1.74% 2 -0.50% 4 1.49% 5 -1.14% 2001-1 0.40% 4 -1.04% 5 -2.80% 2 5.01% 3 1.56% Avg 0.27% -0.70% -1.07% 1.46% -0.05% 2005-1 0.01% 4 -0.13% 5 -0.81% 1 -1.17% 2 -2.11% 2009-1 2.44% 2 1.42% 3 3.16% 5 -0.47% 1 6.55% 2013-1 -1.10% 5 1.69% 1 2.54% 3 -0.21% 4 2.92% 2017-1 -0.03% 4 -0.46% 5 0.85% 2 0.57% 3 0.93% 2021-1 0.13% 3 0.64% 4 -1.48% 1 0.71% 2 0.01% Avg 0.29% 0.63% 0.85% -0.11% 1.66% SPX summary for PY1 1929 – 2021Averages 0.49% 0.09% -0.21% 0.77% 1.15%% Winners 79% 54% 33% 71% 67%MDD 1/2/2001 3.82% — 1/2/1997 2.61% — 1/3/1949 2.16% SPX summary for all years 1928-2024Averages 0.40% 0.16% 0.09% 0.41% 1.04%% Winners 69% 61% 48% 71% 67%MDD 1/4/1932 6.90% — 1/4/2000 4.76% — 1/2/2001 3.82% JanuarySince 1963, over all years, the OTC in January has been up 66% of the time with an average gain of 2.6%. During the 1st year of the Presidential Cycle January has been up 60% time with an average gain of 2.4% The best January ever for the OTC was 1975 (+16.6%), the worst 2008 (-9.9%).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 January over all years since 1963 while the cyan line shows the average during the 1st year of the Presidential Cycle over the same period.
Since 1928 the SPX has been up 63% of the time in January with an average gain of 1.2%. During the 1st year of the Presidential Cycle the SPX has been up 58% of the time with an average gain of 0.8%. The best January ever for the SPX was 1987 (+13.2%) the worst 2009 (-8.6%).The chart below is similar to the one above except it shows the average daily performance over all years for the SPX in January in red and the performance during the 1st year of the Presidential Cycle in cyan.
Since 1979 the Russell 2000 (R2K) has been up 54% of the time in January with an average gain of 1.4%. During the 1st year of the Presidential Cycle the R2K has been up 73% of the time in January with an average gain of 2.1%. The best January ever for the R2K was 1985 (+13.1%), the worst 2009 (-11.2%).The chart below is similar to those above except it shows the daily performance over all years of the R2K in January in magenta and the performance during the 1st year of the Presidential Cycle in cyan.
Since 1885 the DJIA has been up 63% of the time in January with an average gain of 0.9%. During the 1st year of the Presidential Cycle the DJIA has been up 65% of the time in January with an average gain of 0.7%. The best January ever for the DJIA was 1976 (+14.4%), the worst 2009 (-8.8%).The chart below is similar to those above except it shows the daily performance over all years of the DJIA in January in light grey and the performance during the 1st year of the Presidential Cycle in cyan.
ConclusionSeasonality is the only thing the market has going for it.The breadth indicators have been awful.The strongest sectors last week were Utilities and Health care while the weakest were Precious metals and Basic Materials (for the 2nd week) .I expect the major averages to be lower on Friday January 3 than they were on Friday December 27. More By This Author:Technical Market Report For December 21, 2024 Technical Market Report For December 14, 2024 Technical Market Report For December 7, 2024
