Short-term Negative Implications from Today’s Sixth Consecutive Higher High for the S&P500

The NASDAQ/NYSE Volume Ratio closed at 1.95 Monday, its highest reading in
over a year. Despite the lower close for the NASDAQ, investors appeared to be
feeling pretty good, as evidenced by today's low .56 equity put/call ratio,
the lowest reading of the year. Speculative participation continues to run
very high relative to institutional participation, which as I noted back in my
May 4th column generally corresponds with a period of sub-par performance for
the Nasdaq.

The S&P500 posted its sixth consecutive session of higher highs Monday, a sign
that the market is short-term overbought. After six higher highs, odds favor a
lower S&P close 2-4 trading days later as buying pressure is generally
exhausted for the short-term. The last thirty instances in which the SPX
initially posted six consecutive higher highs are noted in the table below.
Note that in 25 cases, or 83% of the time, the S&P closed at a lower level 2-4
trading days later, significantly greater than the 60% at-any-time odds for a
lower S&P close 2-4 sessions later...

Six Consecutive Higher Highs for the S&P500
05/19/08... ???
08/24/07... Lower S&P close two sessions later
07/05/07... Lower S&P close three sessions later
02/06/07... Lower S&P close three sessions later
01/17/07... Lower S&P close two sessions later
03/15/06... Lower S&P close four sessions later
02/22/06... Lower S&P close two sessions later
06/17/05... Lower S&P close two sessions later
05/23/05... Lower S&P close two sessions later
12/16/04... Lower S&P close two sessions later
11/02/04... No lower close 2-4 sessions later
04/01/04... No lower close 2-4 sessions later
01/21/04... Lower S&P close two sessions later
01/05/04... Lower S&P close four sessions later
12/02/03... Lower S&P close three sessions later
11/03/03... Lower S&P close two sessions later
09/03/03... Lower S&P close two sessions later
08/22/03... No lower close 2-4 sessions later
03/20/03... Lower S&P close two sessions later
03/08/02... Lower S&P close three sessions later
02/14/02... Lower S&P close two sessions later
11/08/01... Lower S&P close two sessions later
04/18/01... Lower S&P close three sessions later
08/18/00... No lower close 2-4 sessions later
08/08/00... Lower S&P close two sessions later
07/14/00... Lower S&P close two sessions later
11/18/99... Lower S&P close two sessions later
10/11/99... Lower S&P close two sessions later
07/06/99... No lower close 2-4 sessions later
06/22/99... Lower S&P close two sessions later
04/12/99... Lower S&P close two sessions later

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

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