S&P500 Hits a Two-Week High, New 52-week Highs Decline

The S&P500 (briefly) hit its highest level in two weeks Wednesday, making it
noteworthy that new 52-week highs declined. This lack of confirmation suggests
the market's upside potential is limited heading into Tuesday of next week.
Looking back at the last thirty times that new 52-week highs declined on a day
when the S&P500 hit a ten-day high, it's noteworthy that the market is
typically trading at a similar level or lower three sessions later. In only
four cases was the S&P up more than 0.5%...

New 52-week Highs Decline, S&P500 Hits a Two-week High
03/19/08... S&P500 ??? three sessions later
02/27/08... S&P500 -3.5% three sessions later
12/11/07... S&P500 -0.7% three sessions later
12/07/07... S&P500 -1.2% three sessions later
11/29/07... S&P500 -0.5% three sessions later
08/23/07... S&P500 -2.1% three sessions later
07/16/07... S&P500 +0.2% three sessions later
05/07/07... S&P500 -1.2% three sessions later
04/26/07... S&P500 -0.5% three sessions later
04/23/07... S&P500 +0.9% three sessions later (*)
04/17/07... S&P500 +0.9% three sessions later (*)
04/10/07... S&P500 +0.3% three sessions later
03/23/07... S&P500 -1.3% three sessions later
02/15/07... S&P500 +0.1% three sessions later
02/02/07... S&P500 +0.1% three sessions later
01/25/07... S&P500 +0.4% three sessions later
01/17/07... S&P500 -0.5% three sessions later
01/12/07... S&P500 -0.3% three sessions later
12/15/06... S&P500 -0.3% three sessions later
12/06/06... S&P500 +0.0% three sessions later
11/16/06... S&P500 +0.2% three sessions later
11/09/06... S&P500 +1.1% three sessions later (*)
10/24/06... S&P500 -0.0% three sessions later
09/28/06... S&P500 -0.4% three sessions later
09/18/06... S&P500 -0.2% three sessions later
09/01/06... S&P500 -1.3% three sessions later
08/17/06... S&P500 +0.1% three sessions later
08/03/06... S&P500 -0.7% three sessions later
07/28/06... S&P500 +0.0% three sessions later
07/26/06... S&P500 +0.7% three sessions later (*)
07/03/06... S&P500 -1.2% three sessions later

This tendency also holds true throughout the previous thirty occurrences
between 2004-2006. Again, in only four cases out of thirty did the S&P gain
more than 0.5% three sessions later.

Also worth noting is that both the S&P500 and Nasdaq100 posted higher highs
and higher lows Wednesday despite 2:1 negative breadth on the NYSE and NASDAQ.
As I discussed in my February 21st column, it's generally a positive sign for
the next 2-3 sessions when you see higher highs and higher lows in the face of
lopsided negative breadth. However, keep in mind that the absence of fresh 52-
week highs indicates upside potential is likely to be limited short-term,
suggesting trading conditions could remain choppy heading into early next
week.

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

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