The good news is:

 The NegativesThe market is overbought. The PositivesSeasonality for next week is positive.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 did confirm the SPX at its new high for the year on Tuesday. 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.OTC NH confirmed the OTC high for the year set on Tuesday. 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 finished the week, in comfortably positive territory at 72%.  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 is very strong remaining above 90%.  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 last week. 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 its rise. 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.  There is nothing clear about this chart. 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.  No help from this one either.  SeasonalityNext week includes the last 4 trading days of 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.  Prior to 1953 the market traded 6 days a week so that data has been ignored. The period between Christmas and the New Year is typically characterized by prices drifting upward on the lowest volume of the year.  Volume this December has been unusually high so far. 
Report includes the last 4 days 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 Totals

1967-3 0.04% 2 -0.09% 3 0.07% 4 -0.14% 5 -0.12%

1971-3 0.44% 1 0.35% 2 0.57% 3 0.12% 4 1.49%

1975-3 0.99% 4 -0.24% 5 0.07% 1 1.77% 2 2.59%

1979-3 0.64% 2 -0.30% 3 -0.03% 4 0.58% 5 0.90%

1983-3 -0.43% 2 0.03% 3 -0.43% 4 0.49% 5 -0.34%

1987-3 0.11% 5 -0.57% 1 -0.20% 2 0.43% 3 -0.22%

1991-3 0.00% 3 -0.36% 4 0.04% 5 0.71% 1 0.39%

1995-3 0.54% 2 -0.50% 3 0.95% 4 0.32% 5 1.32%

1999-3 0.80% 1 0.04% 2 -0.65% 3 1.19% 4 1.38%

Avg 0.20% -0.27% -0.06% 0.63% 0.50%

2003-3 -0.33% 4 -1.43% 5 -0.65% 1 -0.30% 2 -2.72%

2007-3 0.51% 2 0.73% 3 -0.23% 4 -0.42% 5 0.59%

2011-3 -0.16% 2 0.15% 3 -0.15% 4 -0.38% 5 -0.54%

2015-3 0.70% 5 0.00% 1 -0.61% 2 -0.87% 3 -0.78%

2019-3 2.00% 3 0.38% 4 0.08% 5 0.77% 1 3.23%

Avg 0.54% -0.03% -0.31% -0.24% -0.04%

OTC summary for PY3 1967 – 2019

Averages 0.42% -0.13% -0.08% 0.31% 0.51%

% Winners 71% 50% 43% 64% 57%

MDD 12/31/2007 2.65% — 12/29/1987 2.02% — 12/31/2015 1.97%

OTC summary for all years 1963 – 2022

Averages 0.19% 0.05% 0.21% 0.25% 0.71%

% Winners 68% 49% 59% 68% 66%

MDD 12/28/2022 2.71% — 12/31/2002 2.69% — 12/31/2007 2.65%

SPX PY3

Day4 Day3 Day2 Day1 Totals

1931-3 -0.61% 6 -0.27% 1 2.00% 2 1.86% 3 2.98%

1935-3 0.11% 4 2.00% 5 0.32% 6 0.64% 1 3.06%

1939-3 1.18% 3 1.94% 4 0.08% 5 0.53% 6 3.73%

1943-3 -1.13% 1 0.00% 2 1.14% 3 0.10% 4 0.12%

1947-3 -0.13% 5 0.20% 6 -0.33% 1 0.86% 2 0.59%

1951-3 1.91% 3 0.39% 4 0.25% 5 -0.10% 6 2.45%

1955-3 1.03% 2 0.87% 3 0.00% 4 0.67% 5 2.57%

1959-3 1.29% 3 1.16% 1 0.35% 2 0.51% 3 3.31%

Avg 0.59% 0.53% 0.28% 0.41% 1.81%

1963-3 0.62% 3 -0.14% 4 0.05% 5 0.22% 1 0.75%

1967-3 -0.58% 2 -0.48% 3 -0.30% 4 -0.05% 5 -1.41%

1971-3 0.53% 1 1.09% 2 0.21% 3 -0.13% 4 1.69%

1975-3 0.84% 4 -0.44% 5 0.03% 1 2.00% 2 2.42%

1979-3 1.26% 2 -0.88% 3 -0.39% 4 -0.18% 5 -0.20%

Avg 0.53% -0.17% -0.08% 0.37% 0.65%

1983-3 -0.99% 2 0.33% 3 -0.64% 4 0.22% 5 -1.08%

1987-3 0.07% 5 -0.91% 1 -0.53% 2 -0.49% 3 -1.87%

1991-3 0.29% 3 -0.77% 4 0.13% 5 0.46% 1 0.10%

1995-3 0.57% 2 -0.35% 3 0.07% 4 -0.41% 5 -0.12%

1999-3 -0.07% 1 1.33% 2 -0.80% 3 -0.22% 4 0.25%

Avg -0.03% -0.07% -0.35% -0.09% -0.54%

2003-3 -0.31% 4 -1.60% 5 0.46% 1 0.05% 2 -1.41%

2007-3 0.44% 2 0.70% 3 -0.15% 4 -0.45% 5 0.54%

2011-3 0.08% 2 0.10% 3 -0.15% 4 0.07% 5 0.10%

2015-3 0.33% 5 0.09% 1 -0.49% 2 -1.03% 3 -1.10%

2019-3 2.00% 3 0.86% 4 -0.12% 5 0.85% 1 3.58%

Avg 0.51% 0.03% -0.09% -0.10% 0.34%

SPX summary for PY3 1931 – 2019

Averages 0.38% 0.23% 0.05% 0.26% 0.92%

% Winners 70% 57% 52% 61% 70%

MDD 12/29/1987 2.39% — 12/28/1931 2.00% — 12/31/2007 1.96%

SPX summary for all years 1928 – 2022

Averages 0.17% 0.21% 0.37% 0.16% 0.89%

% Winners 63% 60% 68% 62% 73%

MDD 12/29/1987 2.39% — 12/31/1996 2.12% — 12/28/1931 2.00% Money supply (M2) and Interest RatesThe following charts were supplied by Gordon Harms.The first chart, made with FastTrack, covers the past 2 years showing the SPX in red and M2 money supply in green.Money supply has remained constant for several months. Treasury rates at their close last Friday and their changes from last month:

All the rates are inverted (shorter term maturities yield more than longer term maturities) relative to the 2 year; everything else is no longer inverted.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. ConclusionSeasonality is the major factor for next week.  Typically the market is up modestly on the lowest volume of the year. The strongest sectors last week were Energy (up from the bottom for the past 6 weeks) and Transportation (for the 2nd week) while the weakest were Biotech and Utilities.I expect the major averages to be higher on Friday, December 29 than they were on Friday, December 22.   More By This Author:Technical Market Report – Saturday, December 16Technical Market Report For December 9, 2023 Technical Market Report For December 2, 2023