Afternoon Recovery Leaves a Short-term Bearish Bar on the Russell Daily Chart

Stock indexes surged higher in the final thirty minutes of Friday's trading,
turning a solid down day into a solid up day, but market internals were less
than impressive. NYSE TICK action remained weak, with the cumulative Adjusted
TICK settling at -363, its tenth consecutive close in negative territory.
TICKscore also closed in modestly negative territory at -9. New 52-week lows
expanded significantly on the big board, jumping from 51 to 110 as the market
traded steadily lower throughout most of Friday's session. It's historically
unusual to see the S&P close higher on a day when new 52-week lows more than
double the previous day's reading (when the previous day's reading was over
20). It's only happened ten times since 1980, nine of which led to a lower S&P
two sessions later. This tends to suggest the market may have a tough time
sustaining any short-term gains beyond Monday...

New 52-week Lows More than Double, S&P Closes Higher
02/22/08... S&P500 ??? two sessions later
08/01/07... S&P500 -2.2% two sessions later
06/21/07... S&P500 -1.6% two sessions later
01/24/07... S&P500 -1.3% two sessions later
01/19/07... S&P500 -0.2% two sessions later
06/08/06... S&P500 -1.7% two sessions later
07/22/04... S&P500 -1.2% two sessions later
04/21/04... S&P500 +1.5% two sessions later
11/28/94... S&P500 -0.1% two sessions later
10/15/90... S&P500 -1.5% two sessions later
10/16/89... S&P500 -0.3% two sessions later

I'd also note that the action in the small cap sector was less than
impressive. Unlike the S&P and Dow, the Russell didn't manage to settle in
positive territory Friday despite the late-session surge. And in the process
it drew a somewhat negative chart pattern. Historically, when the Russell
trades down 1.5% or more intraday and finishes with a small loss of 0.5% or
less, sellers more often than not maintain the upper hand over the next few
sessions. The last thirty times the RUT has drawn this price pattern are noted
in the table below. While it only led to a lower Russell close three days
later 63% of the time, note that's significantly higher than the 43% 'at-any-
time' odds for a lower RUT close three sessions later...

Russell -1.5% Intraday, Closes Down Less Than 0.5%
02/22/08... RUT ??? three sessions later
01/22/08... RUT +2.5% three sessions later
12/13/07... RUT -2.0% three sessions later
11/20/07... RUT -1.9% three sessions later
11/16/07... RUT -3.8% three sessions later
07/18/07... RUT -1.2% three sessions later
03/01/07... RUT -1.5% three sessions later
09/19/06... RUT -0.9% three sessions later
07/26/06... RUT +0.9% three sessions later
06/08/06... RUT -4.8% three sessions later
06/06/06... RUT -1.4% three sessions later
05/24/06... RUT -0.0% three sessions later
07/22/04... RUT -0.4% three sessions later
10/29/02... RUT +4.0% three sessions later
07/25/02... RUT +6.0% three sessions later
06/24/02... RUT -0.1% three sessions later
06/04/02... RUT -0.7% three sessions later
04/01/02... RUT -1.2% three sessions later
01/02/02... RUT +1.2% three sessions later
10/05/01... RUT +1.6% three sessions later
03/01/01... RUT +1.7% three sessions later
10/09/00... RUT -5.4% three sessions later
08/03/00... RUT +1.9% three sessions later
07/26/00... RUT -2.6% three sessions later
03/08/00... RUT -0.8% three sessions later
01/25/00... RUT -3.3% three sessions later
12/15/99... RUT +1.3% three sessions later
10/02/98... RUT -7.9% three sessions later
09/21/98... RUT +2.1% three sessions later
12/19/97... RUT +0.2% three sessions later
06/16/93... RUT -0.8% three sessions later

Categories : Archived EOD Commentary, End-of-Day Commentary

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