S&P and NASDAQ Holding Firm Since Last Tuesday’s Lopsided Breadth Session

This past week marked the second time in three weeks that the S&P has gained
3% or more. That's only occurred 21 times over the last sixty years, as
outlined in the table below...

S&P500 Rallies 3%+ Two out of Past Three Weeks
04/04/08... ???
11/05/04... Higher Weekly Close One Week Later
10/18/02... Higher Weekly Close One Week Later
04/20/01... Higher Weekly Close One Week Later
03/17/00... Higher Weekly Close One Week Later
10/22/99... Higher Weekly Close One Week Later
07/02/99... Higher Weekly Close One Week Later
01/08/99... Higher Weekly Close Three Weeks Later
11/20/98... Higher Weekly Close One Week Later
01/16/98... Higher Weekly Close Two Weeks Later
05/02/97... Higher Weekly Close One Week Later
01/03/92... No higher weekly close within three weeks
01/29/88... Higher Weekly Close Two Weeks Later
12/18/87... Higher Weekly Close One Week Later
08/14/87... Higher Weekly Close One Week Later
11/05/82... No higher weekly close within three weeks
10/22/82... Higher Weekly Close Two Weeks Later
08/27/82... Higher Weekly Close One Week Later
02/14/75... Higher Weekly Close One Week Later
08/28/70... Higher Weekly Close One Week Later
04/11/68... Higher Weekly Close Two Weeks Later
11/04/55... Higher Weekly Close One Week Later

Out of 21 occurrences, 19 led to a higher weekly close within three weeks.
While that sounds impressive, we should keep in mind that the at-any-time odds
for a higher weekly SPX close within three weeks is 76%, so this setup doesn't
provide a significant edge over random.

Short-term, the market remains overbought and vulnerable to a quick move lower
as outlined in Wednesday's column.

From an intermediate-term perspective, the fact that the S&P managed to remain
on firm ground in the three days following Tuesday's big 5:1 positive breadth
session has positive implications looking out two weeks (see the end of my
March 24th column for a recent discussion.) Along similar lines, it's
noteworthy that the NASDAQ triggered the same setup by posting a 3:1 positive
breadth session on Tuesday and closing above Tuesday's close three sessions
later. This has only occurred eleven other times since 1990, but in every case
but one the NDX was trading at a higher level two weeks later...

NASDAQ 3:1 Pos Breadth, Higher NDX Three Days Later
04/04/08... NDX ??? two weeks later
03/24/08... NDX +2.8% two weeks later (open - ends Monday)
11/28/07... NDX +0.3% two weeks later
09/21/07... NDX +4.9% two weeks later
09/04/07... NDX +0.7% two weeks later
03/09/07... NDX +2.8% two weeks later
08/18/06... NDX +0.8% two weeks later
10/18/02... NDX +6.6% two weeks later
04/10/01... NDX +13.6% two weeks later
01/03/92... NDX +4.5% two weeks later
08/26/91... NDX -3.6% two weeks later
01/22/91... NDX +14.0% two weeks later

With new 52-week highs exceeding levels from March and confirming the S&P's
recent push higher, it looks like a short-term pullback could be followed by
another push towards technical resistance in the SPX 1400 area.

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

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