• 526 days Will The ECB Continue To Hike Rates?
  • 526 days Forbes: Aramco Remains Largest Company In The Middle East
  • 528 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 928 days Could Crypto Overtake Traditional Investment?
  • 933 days Americans Still Quitting Jobs At Record Pace
  • 934 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 938 days Is The Dollar Too Strong?
  • 938 days Big Tech Disappoints Investors on Earnings Calls
  • 939 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 940 days China Is Quietly Trying To Distance Itself From Russia
  • 941 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 945 days Crypto Investors Won Big In 2021
  • 945 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 946 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 948 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 948 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 952 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 953 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 953 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 955 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Technical Market Report for December 6, 2014

The good news is:
• The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed at all time highs on Friday.


The negatives

Last week an alert reader suggested the elevated number of new lows were likely to be from energy related issues. They are. Energy, natural resource and fixed income issues are all well represented on the new low lists. The persistently high levels of new lows along with relatively high levels of new highs has triggered a Hindenburg Omen for the past 6 consecutive trading sessions.

The Hindenburg Omen, developed by the late Jim Miekka has been unreliable at predicting tops, however it has been triggered prior to every major top. It tells you that some conditions are in place for a top.


The positives

The ratio of new highs to new lows is still positive, but deteriorating.

The chart below covers the past 6 months showing the NASDAQ composite (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 vertical lines have been drawn on the 1st trading day of each month and dashed horizontal lines have been drawn at 10% levels of the indicator, the line is solid at the neutral 50% level.

OTC HL ratio fell below the neutral level briefly last week before recovering to a modestly positive 55%.

OTC HL ratio

The next chart is similar to the one above except is shows the SPX in red and NY HL Ratio, in blue, has been calculated from NYSE data.

NY HL Ratio also declined finishing the week at a modestly positive 60%.

NY HL Ratio


Seasonality

Next week includes the 5 trading days prior to the 2nd Friday of December during the 2nd year of the Presidential Cycle.

The tables below show the daily change, on a percentage basis, of the OTC and SPX for the 5 trading days prior to the 2nd Friday of December during the 2nd year of the Presidential Cycle.

OTC data covers the period from 1963 to 2013 while SPX data runs from 1953 through 2013. There are summaries for both the 2nd 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.

Average returns for the coming week have been mixed, but mostly positive.

Report for the week before the 2nd Friday of December.
The number following the year is the position in the Presidential Cycle.
Daily returns from Monday to 2nd Friday.

OTC Presidential Year 2
Year Mon Tue Wed Thur Fri Totals
1966-2 0.13% -0.38% 0.13% 0.67% -0.24% 0.31%
1970-2 1.07% 0.16% -0.83% 0.73% 0.67% 1.80%
 
1974-2 -0.52% 1.47% 0.87% 0.15% -0.24% 1.74%
1978-2 0.33% 0.94% 0.66% 0.08% 0.19% 2.20%
1982-2 0.90% 0.57% 0.02% -1.44% -1.43% -1.38%
1986-2 -0.54% -0.55% 0.01% -0.37% -0.50% -1.95%
1990-2 -0.02% -0.94% 0.66% 0.29% -0.72% -0.72%
Avg 0.03% 0.30% 0.44% -0.26% -0.54% -0.02%
 
1994-2 0.09% -0.60% -0.94% -2.06% -0.01% -3.52%
1998-2 1.87% -0.28% 0.77% -1.68% 0.66% 1.33%
2002-2 -3.89% 1.73% 0.42% 0.21% -2.65% -4.18%
2006-2 1.46% 0.16% -0.27% -0.74% 0.40% 1.01%
2010-2 0.13% 0.14% 0.41% 0.29% 0.80% 1.77%
Avg -0.07% 0.23% 0.08% -0.80% -0.16% -0.72%
 
OTC summary for Presidential Year 2 1966 - 2010
Avg 0.08% 0.20% 0.16% -0.32% -0.26% -0.13%
Win% 67% 58% 75% 58% 42% 58%
 
OTC summary for all years 1963 - 2013
Avg 0.17% 0.04% -0.01% -0.38% 0.26% 0.07%
Win% 63% 49% 52% 45% 57% 51%
 
SPX Presidential Year 2
Year Mon Tue Wed Thur Fri Totals
1954-2 0.78% 0.46% -0.17% -0.49% -0.37% 0.21%
1958-2 0.11% 0.57% 1.21% -0.21% -0.24% 1.45%
1962-2 -1.25% 0.08% 0.50% -0.34% 0.24% -0.77%
1966-2 0.14% 0.75% 1.09% 0.40% 0.11% 2.49%
1970-2 0.54% -0.52% 0.08% 0.42% 0.38% 0.89%
Avg 0.06% 0.27% 0.54% -0.04% 0.02% 0.85%
 
1974-2 0.91% 2.56% 0.58% -0.33% -0.56% 3.16%
1978-2 -0.14% 1.34% 0.05% -0.42% -0.46% 0.37%
1982-2 2.22% 0.67% -0.64% -1.28% -0.31% 0.67%
1986-2 0.00% -0.75% 0.67% -1.11% -0.33% -1.52%
1990-2 0.35% -0.74% 1.15% -0.26% -0.77% -0.27%
Avg 0.67% 0.62% 0.36% -0.68% -0.49% 0.48%
 
1994-2 0.01% -0.05% -0.41% -1.28% 0.34% -1.40%
1998-2 0.93% -0.53% 0.18% -1.56% 0.13% -0.85%
2002-2 -2.22% 1.40% 0.06% -0.37% -1.34% -2.48%
2006-2 0.89% 0.40% -0.13% -0.40% 0.18% 0.94%
2010-2 -0.13% 0.05% 0.37% 0.38% 0.60% 1.28%
Avg -0.10% 0.25% 0.01% -0.65% -0.02% -0.50%
 
SPX summary for Presidential Year 2 1954 - 2010
Avg 0.21% 0.38% 0.31% -0.45% -0.16% 0.28%
Win% 67% 67% 73% 20% 47% 60%
 
SPX summary for all years 1953 - 2013
Avg 0.19% 0.00% 0.02% -0.31% 0.22% 0.12%
Win% 59% 47% 53% 39% 66% 54%


Money Supply (M2)

The money supply chart was provided by Gordon Harms. M2 growth declined a bit last week remaining below its long term trend.

SPX and M2 Money Supply Charts


Conclusion

The breadth indicators have been deteriorating and seasonally next week is, on average, the weakest week of December.

I expect the major averages to be lower on Friday December 12 than they were on Friday December 5.

Last week the blue chips were up slightly while the secondaries were down slightly so I am calling last weeks positive forecast a tie.

This report is free to anyone who wants it, so please tell your friends. They can sign up at: http://www.stockmarket-ta.com/signup.html. If it is not for you, reply with REMOVE in the subject line.

These reports are archived at: http://www.safehaven.com/

Good Luck,

YTD W 16 / L 16 / T 17

 

Back to homepage

Leave a comment

Leave a comment