Technical Stock Market Report

The good news is:  The market has been following the average seasonal pattern which remains positive.

The negatives:  The numbers do not mean much.  This is the time of the year when the market usually drifts upward on low volume and that is what it has been doing.

Considering how close the blue chip indices are to their all time highs, there has been a shortage of new highs.

The chart below covers the past 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 1^st trading day of each month.

The SPX is only 3.2% off its all time high yet NY NH is closer to its recent low than its recent high.

The next chart is similar to the one above except is shows the NASDAQ composite (OTC) in blue and OTC NH has been calculated from NASDAQ data.

The patterns are similar.

The positives:  New lows disappeared last week.

NYSE new lows fell from 228 on Friday December 18 to 5 last Thursday while NASDAQ new lows declined from 156 to 39 over the same period.

The chart below covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.  Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the 50%, neutral level.

NY HL Ratio shot up into positive territory last week.

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

OTC HL Ratio also moved sharply upward, but not as dramatically as NY HL Ratio.

Money supply (M2)

The money supply chart was provided by Gordon Harms.

Money supply growth increased along with the equity market.

Conclusion

Seasonal factors are all that matter.

I expect the major averages to be higher on Thursday December 31 than they were on Thursday December 24.

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Disclaimer: Charts and figures presented herein are believed to be reliable but I cannot attest to their accuracy.  Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus and the Wall Street Journal (wsj.com).  Historical data is from Barron’s and ISI price books.  The views expressed dare provided for information purposes only and should not be construed in any way as investment advice.  Furthermore, the opinions expressed may change without notice.