Breadth Heavily Lopsided in Favor of Advancers for a Second Day, Sends McClellan over +200

Stock indexes settled lower Monday in light trading. The S&P drew an ‘inside
day’ as it remained within the boundaries of Friday’s session. Big board
volume was light at only 1.3 billion shares, the lowest volume session in over
a month. NYSE TICK action suggested modest institutional selling, with
TICKscore settling at -5, its first negative reading in ten sessions.

When I discuss the ‘breadth’ of the market, it’s usually in reference to daily
advance/decline data. But from an intermediate and longer-term perspective,
weekly advance/decline data provides a fresh look at the breadth of the
market. A stock falls into the ‘advancers’ or ‘decliners’ category depending
on whether it closed higher or lower that week. From this data we can create a
weekly advance/decline ratio – click here for the current chart or here for a
long-term view. You can see that we just hit extreme territory last week as
nearly seven times more stocks posted a higher weekly close. Looking back at
times when the weekly advance/decline ratio closed above 5.0, we find the S&P
typically trading at a higher level three weeks later as the surge of buying
creates upside momentum. Even when we loosen the parameters a bit and only
look for a weekly reading over 4.0, there’s still a notable tendency for
intermediate-term strength. There have been a total of 31 occurrences since
1981, 27 of which led to a flat-to-up S&P three weeks later. In only four
cases was the S&P500 down 1% or more…

NYSE Weekly Advance/Decline Ratio Closes Over 4.0
02/01/08… Adv/Dec 6.98… S&P500 ??? three weeks later
08/24/07… Adv/Dec 4.60… S&P500 +0.3% three weeks later
03/23/07… Adv/Dec 4.68… S&P500 +1.2% three weeks later
02/02/07… Adv/Dec 4.15… S&P500 +0.2% three weeks later
09/01/06… Adv/Dec 4.50… S&P500 +0.3% three weeks later
08/18/06… Adv/Dec 4.56… S&P500 -0.3% three weeks later
07/28/06… Adv/Dec 4.63… S&P500 +1.9% three weeks later
01/06/06… Adv/Dec 5.35… S&P500 -0.1% three weeks later
05/20/05… Adv/Dec 4.34… S&P500 +0.7% three weeks later
02/04/05… Adv/Dec 4.03… S&P500 +0.7% three weeks later
08/20/04… Adv/Dec 5.02… S&P500 +2.3% three weeks later
05/28/04… Adv/Dec 7.21… S&P500 +1.3% three weeks later
11/28/03… Adv/Dec 4.71… S&P500 +2.9% three weeks later
10/03/03… Adv/Dec 5.27… S&P500 -0.1% three weeks later
05/02/03… Adv/Dec 4.18… S&P500 +0.3% three weeks later
01/03/03… Adv/Dec 4.35… S&P500 -5.2% three weeks later (*)
01/02/98… Adv/Dec 4.43… S&P500 -1.8% three weeks later (*)
05/02/97… Adv/Dec 5.17… S&P500 +4.2% three weeks later
08/02/96… Adv/Dec 4.08… S&P500 +0.7% three weeks later
12/27/91… Adv/Dec 6.36… S&P500 +3.1% three weeks later
02/08/91… Adv/Dec 5.42… S&P500 +3.1% three weeks later
06/03/88… Adv/Dec 4.21… S&P500 +2.8% three weeks later
01/09/87… Adv/Dec 8.27… S&P500 +5.9% three weeks later
08/15/86… Adv/Dec 4.25… S&P500 +1.3% three weeks later
08/03/84… Adv/Dec 6.88… S&P500 +3.2% three weeks later
01/06/84… Adv/Dec 4.32… S&P500 -3.2% three weeks later (*)
07/29/83… Adv/Dec 12.74… S&P500 +0.9% three weeks later
11/05/82… Adv/Dec 8.29… S&P500 -5.1% three weeks later (*)
10/08/82… Adv/Dec 6.61… S&P500 +2.0% three weeks later
08/27/82… Adv/Dec 4.79… S&P500 +4.7% three weeks later
08/20/82… Adv/Dec 10.37… S&P500 +7.0% three weeks later
10/02/81… Adv/Dec 4.05… S&P500 -0.6% three weeks later

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

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