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

OTC HL Ratio is a little weaker than NY HL Ratio.

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.

The SPX did hit a new low which was unconfirmed by NY NL.

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 for that period.  

OTC data covers the period from 1963 to 2018 while SPX data runs from 1953 to 2018.  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 modest and mixed.

​​​​The Positives

New lows decreased Friday which was a down day for all of the major averages.
The market is oversold.

The next chart covers the past 6 months showing the OTC in blue and a 10% trend of NASDAQ new lows (OTC NL) in brown.  OTC NL has been plotted on an inverted Y axis so diminishing numbers of new lows move the indicator upward (up is good).

The OTC is retesting its low of 2 weeks ago while OTC NL is far from confirming a new low, if one is reached.

Technical market report for December 8, 2018

The good news is: Last weeks price lows were unconfirmed by the breadth indicators.


The Negatives

New lows remained at dangerous levels.
Seasonality is mixed to weak for the next 2 weeks.

The first chart covers the past 6 months showing the S&P 500 (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 vertical lines have been drawn on the first trading day of the month.  Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

 NY HL Ratio returned to an extreme negative level, although, a little higher than we have seen in the past month or so.  

Conclusion
Last week was a mirror image of the previous week, prices fell sharply, but the decline was not confirmed by the breadth indicators.  Seasonality is mixed for next week.  The market is oversold.

I expect the major averages to be higher on Friday December 14 than they were on Friday December 7.

Last weeks positive forecast was a miss.

Good Luck,
Mike Burk
YTD W 19 / L 17 / T 13

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%
 1994-2   0.09%  -0.60%  -0.94%  -2.06%  -0.01%  -3.52%

 Avg      0.15%  -0.11%   0.08%  -0.70%  -0.49%  -1.07%

 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%
 2014-2  -0.84%   0.54%  -1.73%   0.52%  -1.16%  -2.67%

 Avg     -0.25%   0.46%  -0.08%  -0.28%  -0.39%  -0.55%

OTC summary for Presidential Year 2 1966 - 2014 
 Avg      0.01%   0.23%   0.01%  -0.26%  -0.33%  -0.33%
 Win%       62%     62%     69%     62%     38%     54%

OTC summary for all years 1963 - 2017
 Avg      0.12%   0.05%  -0.04%  -0.32%   0.19%   0.01%
 Win%       60%     49%     52%     49%     56%     49%


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%
 1974-2   0.91%   2.56%   0.58%  -0.33%  -0.56%   3.16%

 Avg      0.09%   0.69%   0.69%  -0.01%  -0.02%   1.44%

 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%
 1994-2   0.01%  -0.05%  -0.41%  -1.28%   0.34%  -1.40%

 Avg      0.49%   0.09%   0.16%  -0.87%  -0.31%  -0.43%

 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%
 2014-2  -0.73%  -0.02%  -1.64%   0.45%  -1.62%  -3.55%

 Avg     -0.25%   0.26%  -0.23%  -0.30%  -0.41%  -0.93%

SPX summary for Presidential Year 2 1954 - 2014 
 Avg      0.15%   0.35%   0.18%  -0.40%  -0.25%   0.04%
 Win%       63%     63%     69%     25%     44%     56%

SPX summary for all years 1953 - 2017
 Avg      0.16%  -0.01%   0.00%  -0.27%   0.17%   0.05%
 Win%       57%     45%     52%     43%     65%     54%