Technical Market Report For October 26

The good news is:

 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 1^st trading day of each month.  NY NH resumed its decline last week.The next chart is similar to the 1^st one except it shows the NASDAQ composite (OTC) in blue and OTC NH in green has been calculated with NASDAQ data.  OTC NH also fell last week reducing the likelihood of a new index high, should it occur.  The PositivesThe next chart covers the past 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 declined a bit at the end of last week, but the numbers remained relatively small.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 NYSE new lows also picked up during the middle of last week, but remained at unthreatening levels.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 declined last week, but remained in positive 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 also declined last week, but finished the week at a strong 78%. 
 SeasonalityNext week includes the last 4 trading days of October and the 1^st trading day of November during the 4^th 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 4^th year of the Presidential Cycle and all years combined.  Average returns for the coming week have been positive by all measures. Report for the last 4 days of October and the first 1 day 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 4 (PY4)               Day4      Day3      Day2      Day1      Day1      Totals 1964-4      -0.07% 2   0.11% 3  -0.11% 4   0.14% 5   0.14% 1     0.21% 1968-4      -0.76% 5  -0.32% 1  -0.75% 2  -0.68% 4  -0.10% 5    -2.61% 1972-4       0.37% 4   0.12% 5  -0.05% 1   0.60% 2   1.04% 3     2.08% 1976-4       0.06% 2   0.22% 3   0.26% 4   0.56% 5   0.64% 1     1.73% 1980-4      -0.30% 2   0.38% 3  -1.02% 4   0.14% 5   0.19% 1    -0.61%  Avg         -0.14%     0.10%    -0.34%     0.15%     0.38%       0.16%  1984-4      -0.65% 5  -0.36% 1   0.39% 2  -0.17% 3   0.38% 4    -0.41% 1988-4      -0.24% 3  -0.89% 4   0.27% 5  -0.09% 1  -0.03% 2    -0.98% 1992-4      -0.33% 2   0.74% 3   0.74% 4  -0.11% 5   0.40% 1     1.44% 1996-4      -0.55% 1  -1.05% 2   0.26% 3   1.27% 4   0.02% 5    -0.05% 2000-4       1.32% 4   0.19% 5  -2.65% 1   5.58% 2  -1.07% 3     3.36%  Avg         -0.09%    -0.27%    -0.20%     1.30%    -0.06%       0.67%  2004-4       0.77% 2   2.14% 3   0.29% 4  -0.04% 5   0.25% 1     3.41% 2008-4       9.53% 2   0.47% 3   2.49% 4   1.32% 5   0.31% 1    14.13% 2012-4      -0.29% 3   0.15% 4   0.06% 5  -0.36% 3   1.44% 4     1.00% 2016-4      -0.63% 3  -0.65% 4  -0.50% 5  -0.02% 1  -0.69% 2    -2.48% 2020-4       0.64% 2  -3.73% 3   1.64% 4  -2.45% 5   0.42% 1    -3.48%  Avg          2.00%    -0.33%     0.80%    -0.31%     0.35%       2.51% OTC summary for PY4 1964 – 2020Averages      0.59%    -0.17%     0.09%     0.38%     0.22%       1.12%% Winners       40%       60%       60%       47%       73%         53%MDD  10/30/2020  4.55% —  10/30/2000  2.65% —  11/1/1968  2.59% OTC summary for all years 1963 – 2023Averages      0.12%    -0.14%     0.35%     0.37%     0.30%       0.99%% Winners       43%       59%       57%       64%       66%         62%MDD 10/31/1978  8.29% —  10/30/2001  6.09% —  11/1/2011  4.81%
 SPX PY4               Day4      Day3      Day2      Day1      Day1      Totals 1928-4       1.02% 6   0.59% 1  -1.09% 2  -0.37% 3   1.43% 4     1.58% 1932-4       0.87% 4   2.01% 5  -1.27% 6  -0.57% 1  -2.87% 2    -1.83% 1936-4       0.06% 3   1.53% 4   0.17% 5  -0.12% 6  -0.23% 1     1.42% 1940-4      -0.37% 1   0.19% 2   0.83% 3   1.47% 4   0.00% 5     2.11%  1944-4       0.16% 5   0.31% 6  -0.23% 1   0.16% 2   0.39% 3     0.78% 1948-4      -0.12% 3  -0.66% 4   0.24% 5   0.24% 6   0.97% 1     0.67% 1952-4       0.17% 2   0.08% 3   0.00% 4   1.53% 5   0.33% 1     2.11% 1956-4       0.92% 5   0.28% 1  -0.06% 2  -1.70% 3   2.06% 4     1.49% 1960-4       1.43% 3   1.07% 4  -0.39% 5  -0.04% 1   1.03% 2     3.11%  Avg          0.51%     0.22%    -0.09%     0.04%     0.96%       1.63%  1964-4       0.00% 2  -0.36% 3   0.05% 4   0.15% 5   0.38% 1     0.21% 1968-4       0.35% 5  -0.29% 1  -0.58% 2   0.11% 4  -0.34% 5    -0.75% 1972-4       0.24% 4  -0.33% 5  -0.03% 1   0.90% 2   0.98% 3     1.76% 1976-4       0.99% 2   0.69% 3  -0.15% 4   1.27% 5   0.19% 1     3.00% 1980-4       0.13% 2  -0.11% 3  -1.27% 4   0.93% 5   1.23% 1     0.92%  Avg          0.34%    -0.08%    -0.39%     0.67%     0.49%       1.03%  1984-4      -0.61% 5  -0.31% 1   1.25% 2  -0.45% 3   0.84% 4     0.72% 1988-4      -0.35% 3  -1.46% 4   0.45% 5   0.16% 1   0.03% 2    -1.17% 1992-4       0.08% 2   0.39% 3   0.17% 4  -0.52% 5   0.97% 1     1.10% 1996-4      -0.52% 1   0.61% 2  -0.09% 3   0.62% 4  -0.21% 5     0.41% 2000-4      -0.03% 4   1.11% 5   1.38% 1   2.20% 2  -0.57% 3     4.08%  Avg         -0.29%     0.07%     0.63%     0.40%     0.21%       1.03%  2004-4       1.49% 2   1.29% 3   0.18% 4   0.24% 5   0.03% 1     3.23% 2008-4      10.79% 2  -1.11% 3   2.58% 4   1.54% 5  -0.25% 1    13.55% 2012-4      -0.31% 3   0.30% 4  -0.07% 5   0.03% 3   1.09% 4     1.03% 2016-4      -0.17% 3  -0.30% 4  -0.31% 5  -0.01% 1  -0.68% 2    -1.47% 2020-4      -0.30% 2  -3.53% 3   1.19% 4  -1.21% 5   1.23% 1    -2.62%  Avg          2.30%    -0.67%     0.71%     0.12%     0.28%       2.74% SPX summary for PY4 1928 – 2020Averages      0.66%     0.08%     0.12%     0.27%     0.33%       1.48%% Winners       58%       58%       46%       63%       67%         79%MDD  11/1/1932  4.65% —  10/30/2020  3.85% —  10/27/1988  1.81% SPX summary for all years 1928 – 2023Averages      0.10%    -0.08%     0.43%     0.19%     0.25%       0.87%% Winners       58%       50%       59%       56%       64%         65%MDD 10/29/1929  21.24% —  10/31/1933  6.08% —  11/1/2011  5.20% NovemberSince 1963, over all years, the OTC in November has been up 74% of the time with an average gain of 2.0%.  During the 4^th year of the Presidential Cycle November has been up 73% time with an average gain of 0.8%.  The best November ever for the OTC was 2001 (+14.2%), the worst 2000 (-22.9%).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 1^st 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 1^st trading day and at 5 trading day intervals after that.  The line is solid on the 11^th trading day, the dividing point.In the chart below the blue line shows the daily average of the OTC in November over all years since 1963 while the green line shows the average during the 4^th year of the Presidential Cycle over the same period.Since 1928 the SPX has been up 61% of the time in November with an average gain of 1.0%.  During the 4^th year of the Presidential Cycle the SPX has been up 58% of the time with an average gain of 1.1%.  The best November ever for the SPX was 1928 (+12.0%), the worst 1929 (-13.4%).The chart below is similar to the one above except it shows the average daily performance over all years for the SPX in November in red and the performance during the 4^th year of the Presidential Cycle in green.Since 1979 the Russell 2000 (R2K) has been up 69% of the time in November with an average gain of 2.5%.  During the 4^th year of the Presidential Cycle the R2K has been up 64% of the time with an average gain of 2.5%.  The best November ever for the R2K, 2020 (+18.3%), the worst 2008 (-12.0%)The chart below is similar to those above except it shows the daily performance over all years of the R2K in November in magenta and the performance during the 4^th year of the Presidential Cycle in green.Since 1885 the Dow Jones Industrial Average (DJIA) has been up 59% of the time in November with an average gain of 1.1%.  During the 4^th year of the Presidential Cycle the DJIA has been up 62% of the time in November with an average gain of 2.0%.  The best November ever for the DJIA, 1928 (+16.3%); the worst 1973 (-14.0%).The chart below is similar to those above except it shows the daily performance over all years of the DJIA in November in blue and the performance during the 4^th year of the Presidential Cycle in green. ConclusionLast week the market followed its seasonally weak pattern.The coming week has had a strong seasonal patternThe strongest sectors last week were Leisure and Precious Metals (for the 2^nd week in a row) while the weakest were Energy (for the 2^nd week in a row) and Health care.I expect the major averages to be higher on Friday November 1 than they were on Friday October 24. Last week the OTC was up while the other major indices were down; so I am calling last weeks positive forecast a tie. More By This Author:Technical Market Report For October 19Technical Market Report For Saturday, Oct. 5 Technical Market Report For September 28, 2024