Double 90% Down Volume Day

Stock indexes gapped lower Tuesday and never looked back, leading to a steep
3% decline for the S&P500. Breadth was heavily lopsided in favor of decliners
by more than a 4:1 margin, and volume associated with declining issues
accounted for 92% of total volume. TICKscore closed at -11, reflecting only
modest institutional selling despite the sharply lower close.

Note that the short-term bearish setups discussed in my January 31st and
February 3rd columns, both related to the overbought McClellan Oscillator, are
no longer in effect.

NYSE TRIN closed at 3.0 Tuesday, reflecting very lopsided trading conditions.
As I noted in my October 21st column, the S&P has a good track record of
closing flat-to-higher the day after a closing TRIN over 3.0. I added the one-
day TRIN buy setup to the board despite the fact we didn't quite see a TRIN
over 3.0 (it closed right on the 3.0 mark). The reasoning is that we also saw
a double 90% down volume session Tuesday. That means volume associated with
declining issues accounted for over 90% of total volume on both the NYSE and
NASDAQ exchanges. 90% down volume days have been seen with increasing
regularity on the big board, as recently discussed in my January 7th column,
which is not a positive sign from a long-term perspective. A 90% down volume
day on the NASDAQ, however, is still pretty rare. We've only seen four in the
past year, compared with a whopping seventeen on the NYSE. Looking back over
the last twenty-five years, there have only been ten days similar to Tuesday
in that down volume accounted for over 90% of total volume on both exchanges.
Next-day S&P performance was generally solid, suggesting selling pressure is
likely at a short-term exhaustion point...

90% Down Volume on NYSE and NASDAQ
02/05/08... S&P500 ??? next day
01/04/08... S&P500 +0.3% next day
10/19/07... S&P500 +0.4% next day
02/27/07... S&P500 +0.6% next day
03/24/03... S&P500 +1.2% next day
09/03/02... S&P500 +1.8% next day
04/03/01... S&P500 -0.3% next day
04/14/00... S&P500 +3.3% next day
08/31/98... S&P500 +3.8% next day
10/27/97... S&P500 +5.1% next day
10/19/87... S&P500 +5.2% next day

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

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