The good news is:
• The NASDAQ composite (OTC) closed at a multi year high on Friday and the rest of the major indices closed at all time highs.
The negatives
New highs picked up at the end of last week, but remain well below levels seen earlier in the year when the indices were lower.
The chart below covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.
OTC NH has been making progressively lower highs most of this year.
The next chart is similar to the one above except is shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated from NYSE data.
NY NH also failed to confirm the new high in the index.
The positives
New lows have remained at non threatening levels.
The chart below 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 neutral 50% level.
OTC HL Ratio bounced around the 80% level last week and closed at 84% on Friday.
There are trading systems that impose a No Sell Filter when variations of this indicator are above 80%.
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 from NYSE data.
NY HL Ratio remains positive, but appears to be in a falling trend.
Seasonality
Next week is seasonally significant in two ways. It is the week of Thanksgiving and it includes the last 4 trading days of November during the 1st year of the Presidential Cycle.
I have included 2 sets of tables, the 1st shows the daily percentage return for the last 4 trading days of November and the 2nd shows the week of Thanksgiving.
OTC data covers the period from 1963 - 2012 while SPX data for the end of month table runs from 1928 - 2012. and for the Thanksgiving table from 1953 - 2012. There are summaries for both the 1st year of the Presidential Cycle and all years combined. Prior to 1953 the market traded 6 days a week so the SPX Thanksgiving data for that period has been ignored.
The last 4 days of November have been weaker than Thanksgiving week and weaker during the 1st year of the Presidential Cycle than other years.
Report for the last 4 days of November.
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 1 | |||||
| Day4 | Day3 | Day2 | Day1 | Totals | |
| 1965-1 | -0.02% 3 | 0.47% 5 | 0.47% 1 | 0.11% 2 | 1.03% |
| 1969-1 | -0.55% 1 | -1.24% 2 | 0.05% 3 | -0.11% 5 | -1.86% |
| 1973-1 | -3.26% 2 | 0.86% 3 | -0.34% 4 | -1.17% 5 | -3.91% |
| 1977-1 | 0.57% 5 | -0.26% 1 | -0.83% 2 | -0.05% 3 | -0.56% |
| 1981-1 | 0.52% 2 | 0.49% 3 | 0.50% 5 | 0.17% 1 | 1.69% |
| 1985-1 | -0.33% 1 | 0.24% 2 | 0.81% 3 | 0.30% 5 | 1.01% |
| 1989-1 | -0.10% 1 | 0.11% 2 | -0.19% 3 | 0.06% 4 | -0.12% |
| Avg | -0.52% | 0.29% | -0.01% | -0.14% | -0.38% |
| 1993-1 | 0.85% 3 | 0.22% 5 | -0.44% 1 | 0.38% 2 | 1.01% |
| 1997-1 | -2.09% 1 | 0.13% 2 | 0.35% 3 | 0.38% 5 | -1.23% |
| 2001-1 | -0.27% 2 | -2.48% 3 | 2.40% 4 | -0.14% 5 | -0.49% |
| 2005-1 | 0.13% 5 | -1.04% 1 | -0.30% 2 | 0.00% 3 | -1.20% |
| 2009-1 | -0.31% 2 | 0.32% 3 | -1.73% 5 | 0.29% 1 | -1.44% |
| Avg | -0.34% | -0.57% | 0.06% | 0.18% | -0.67% |
| OTC summary for Presidential Year 1 1965 - 2009 | |||||
| Averages | -0.40% | -0.18% | 0.06% | 0.02% | -0.51% |
| % Winners | 33% | 67% | 50% | 67% | 33% |
| MDD 11/30/1973 3.90% -- 11/28/2001 2.74% -- 11/24/1997 2.09% | |||||
| OTC summary for all years 1963 - 2012 | |||||
| Averages | 0.24% | 0.14% | 0.37% | -0.02% | 0.72% |
| % Winners | 56% | 66% | 68% | 64% | 62% |
| MDD 11/30/2000 10.55% -- 11/30/1987 3.97% -- 11/30/1973 3.90% | |||||
| SPX Presidential Year 1 | |||||
| Day4 | Day3 | Day2 | Day1 | Totals | |
| 1929-1 | -0.37% 5 | -1.16% 1 | -2.91% 2 | 1.26% 3 | -3.19% |
| 1933-1 | 0.30% 6 | -3.49% 1 | 0.10% 2 | 1.86% 3 | -1.23% |
| 1937-1 | 4.92% 5 | 4.78% 6 | -1.97% 1 | 1.37% 2 | 9.10% |
| 1941-1 | -0.86% 3 | -0.65% 4 | -0.98% 5 | -0.22% 6 | -2.70% |
| 1945-1 | 1.24% 2 | -0.52% 3 | -0.18% 4 | 0.94% 5 | 1.48% |
| 1949-1 | 0.25% 6 | -0.56% 1 | -0.19% 2 | 0.25% 3 | -0.25% |
| Avg | 1.17% | -0.09% | -0.64% | 0.84% | 1.28% |
| 1953-1 | 0.57% 2 | 0.08% 3 | 0.57% 5 | 0.41% 1 | 1.63% |
| 1957-1 | 0.76% 1 | -2.65% 2 | 2.89% 3 | 1.14% 5 | 2.14% |
| 1961-1 | 0.01% 1 | -0.14% 2 | -0.07% 3 | -0.53% 4 | -0.72% |
| 1965-1 | 0.17% 3 | 0.10% 5 | -0.25% 1 | -0.21% 2 | -0.18% |
| 1969-1 | -1.15% 1 | -0.32% 2 | 0.36% 3 | 0.58% 5 | -0.53% |
| Avg | 0.08% | -0.59% | 0.70% | 0.28% | 0.47% |
| 1973-1 | -0.91% 2 | 2.04% 3 | -0.35% 4 | -1.39% 5 | -0.61% |
| 1977-1 | 0.21% 5 | -0.67% 1 | -1.55% 2 | 0.30% 3 | -1.72% |
| 1981-1 | 1.57% 2 | 0.44% 3 | 0.84% 5 | 1.01% 1 | 3.85% |
| 1985-1 | -0.58% 1 | 0.16% 2 | 0.93% 3 | -0.18% 5 | 0.33% |
| 1989-1 | 0.48% 1 | 0.05% 2 | -0.63% 3 | 0.70% 4 | 0.59% |
| Avg | 0.15% | 0.40% | -0.15% | 0.09% | 0.49% |
| 1993-1 | 0.29% 3 | 0.15% 5 | -0.25% 1 | -0.02% 2 | 0.17% |
| 1997-1 | -1.70% 1 | 0.44% 2 | 0.09% 3 | 0.40% 5 | -0.78% |
| 2001-1 | -0.68% 2 | -1.83% 3 | 1.03% 4 | -0.07% 5 | -1.54% |
| 2005-1 | 0.21% 5 | -0.85% 1 | 0.00% 2 | -0.64% 3 | -1.28% |
| 2009-1 | -0.05% 2 | 0.45% 3 | -1.72% 5 | 0.38% 1 | -0.95% |
| Avg | -0.39% | -0.33% | -0.17% | 0.01% | -0.88% |
| SPX summary for Presidential Year 1 1929 - 2009 | |||||
| Averages | 0.22% | -0.20% | -0.20% | 0.35% | 0.17% |
| % Winners | 62% | 48% | 43% | 62% | 38% |
| MDD 11/26/1929 4.40% -- 11/27/1933 3.49% -- 11/29/1941 2.67% | |||||
| SPX summary for all years 1928 - 2012 | |||||
| Averages | 0.14% | 0.03% | 0.04% | 0.20% | 0.40% |
| % Winners | 62% | 52% | 54% | 57% | 52% |
| MDD 11/28/1931 7.09% -- 11/30/1987 6.53% -- 11/29/1950 4.49% | |||||
Report for the 3 days before Thanksgiving and 1 day after. Day1 = the day after
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.
| Year 1 | |||||
| Day4 | Day3 | Day2 | Day1 | Totals | |
| 1965-1 | -0.09% 1 | 0.04% 2 | -0.02% 3 | 0.47% 5 | 0.40% |
| 1969-1 | -0.55% 1 | -1.24% 2 | 0.05% 3 | -0.11% 5 | -1.86% |
| 1973-1 | -2.35% 1 | 0.00% 2 | -2.44% 3 | 0.77% 5 | -4.03% |
| 1977-1 | 0.13% 1 | 0.57% 2 | 0.79% 3 | 0.57% 5 | 2.05% |
| 1981-1 | -0.30% 1 | 0.52% 2 | 0.49% 3 | 0.50% 5 | 1.22% |
| 1985-1 | -0.33% 1 | 0.24% 2 | 0.81% 3 | 0.30% 5 | 1.01% |
| 1989-1 | -0.22% 1 | -0.34% 2 | 0.22% 3 | 0.33% 5 | -0.02% |
| Avg | -0.61% | 0.20% | -0.03% | 0.49% | 0.05% |
| 1993-1 | -1.79% 1 | 1.18% 2 | 0.85% 3 | 0.22% 5 | 0.47% |
| 1997-1 | -2.09% 1 | 0.13% 2 | 0.35% 3 | 0.38% 5 | -1.23% |
| 2001-1 | 1.89% 1 | -2.79% 2 | -0.29% 3 | 1.50% 5 | 0.31% |
| 2005-1 | 0.66% 1 | 0.53% 2 | 0.28% 3 | 0.13% 5 | 1.60% |
| 2009-1 | 1.40% 1 | -0.31% 2 | 0.32% 3 | -1.73% 5 | -0.33% |
| Avg | 0.01% | -0.25% | 0.30% | 0.10% | 0.16% |
| OTC summary for Presidential Year 1 1965 - 2009 | |||||
| Averages | -0.30% | -0.12% | 0.12% | 0.28% | -0.03% |
| % Winners | 33% | 58% | 75% | 83% | 58% |
| MDD 11/21/1973 4.73% -- 11/21/2001 3.07% -- 11/24/1997 2.09% | |||||
| OTC summary for all years 1963 - 2012 | |||||
| Averages | -0.06% | -0.21% | 0.34% | 0.47% | 0.55% |
| % Winners | 48% | 51% | 76% | 80% | 64% |
| SPX Presidential Year 1 | |||||
| Day4 | Day3 | Day2 | Day1 | Totals | |
| 1953-1 | -0.33% 1 | 0.57% 2 | 0.08% 3 | 0.57% 5 | 0.90% |
| 1957-1 | 0.76% 1 | -2.65% 2 | 2.89% 3 | 1.14% 5 | 2.14% |
| 1961-1 | 0.14% 1 | 0.08% 2 | -0.11% 3 | 0.20% 5 | 0.31% |
| 1965-1 | -0.65% 1 | 0.15% 2 | 0.17% 3 | 0.10% 5 | -0.23% |
| 1969-1 | -1.15% 1 | -0.32% 2 | 0.36% 3 | 0.58% 5 | -0.53% |
| Avg | -0.24% | -0.43% | 0.68% | 0.52% | 0.52% |
| 1973-1 | -3.05% 1 | -2.04% 2 | 1.11% 3 | -0.32% 5 | -4.29% |
| 1977-1 | -0.08% 1 | 0.88% 2 | 0.42% 3 | 0.21% 5 | 1.42% |
| 1981-1 | -0.09% 1 | 1.57% 2 | 0.44% 3 | 0.84% 5 | 2.76% |
| 1985-1 | -0.58% 1 | 0.16% 2 | 0.93% 3 | -0.18% 5 | 0.33% |
| 1989-1 | -0.66% 1 | 0.07% 2 | 0.68% 3 | 0.60% 5 | 0.69% |
| Avg | -0.89% | 0.13% | 0.72% | 0.23% | 0.18% |
| 1993-1 | -0.75% 1 | 0.41% 2 | 0.29% 3 | 0.15% 5 | 0.10% |
| 1997-1 | -1.70% 1 | 0.44% 2 | 0.09% 3 | 0.40% 5 | -0.78% |
| 2001-1 | 1.09% 1 | -0.73% 2 | -0.49% 3 | 1.17% 5 | 1.04% |
| 2005-1 | 0.53% 1 | 0.51% 2 | 0.35% 3 | 0.21% 5 | 1.59% |
| 2009-1 | 1.36% 1 | -0.05% 2 | 0.45% 3 | -1.72% 5 | 0.04% |
| Avg | 0.10% | 0.12% | 0.14% | 0.04% | 0.40% |
| SPX summary for Presidential Year 1 1953 - 2009 | |||||
| Averages | -0.34% | -0.06% | 0.51% | 0.26% | 0.37% |
| % Winners | 33% | 67% | 87% | 80% | 73% |
| MDD 11/20/1973 5.03% -- 11/26/1957 2.65% -- 11/27/2009 1.72% | |||||
| SPX summary for all years 1953 - 2012 | |||||
| Averages | -0.11% | 0.09% | 0.35% | 0.38% | 0.71% |
| % Winners | 44% | 59% | 79% | 75% | 67% |
Money Supply (M2)
The money supply chart was provided by Gordon Harms. Money supply growth continued to declined last week.
Conclusion
The breadth indicators failed again to confirm the new index highs, seasonality for next week is mixed, but the Fed continues to chip in $85B a month.
I expect the major averages to be higher on Friday November 29 than they were on Friday November 22.
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In his latest newsletter titled "Stories", Jerry Minton discusses explanations for some market behavior. You can sign up for his free newsletter at: http://www.alphaim.net/
Good Luck,
YTD W 21/L 14/T 12
