Short-term Negative Setups in Play, Speculators Remain in the Drivers Seat

When new 52-week lows increase on a day when both of the major averages hit
their highest level in a month, it typically means limited upside potential
over the next few sessions. This was the case last Thursday on both the NYSE
and NASDAQ. The last thirty times this pattern has occurred are listed in the
table below, along with the S&P's performance three days later. Note that in
only five cases out of the last thirty, or 17% of the time did the S&P500 gain
more than 0.5% three days later. That's significantly worse than the S&P's at-
any-time odds of 39% for a gain of more than 0.5% over any three-day period...

SPX & NDX Both Hit a One-Month High,
New 52-week Lows Expand on Both Exchanges
05/15/08... S&P500 ??? three sessions later
04/02/08... S&P500 +0.4% three sessions later
12/11/07... S&P500 -0.7% three sessions later
10/11/07... S&P500 -1.0% three sessions later
10/09/07... S&P500 -0.2% three sessions later
07/16/07... S&P500 +0.2% three sessions later
07/12/07... S&P500 +0.1% three sessions later
06/01/07... S&P500 -1.2% three sessions later
05/23/07... S&P500 -0.3% three sessions later
05/04/07... S&P500 +0.5% three sessions later
04/17/07... S&P500 +0.9% three sessions later (*)
04/05/07... S&P500 -0.3% three sessions later
04/07/06... S&P500 -0.6% three sessions later
03/21/06... S&P500 +0.4% three sessions later
01/09/06... S&P500 -0.3% three sessions later
11/10/05... S&P500 -0.2% three sessions later
11/12/04... S&P500 -0.2% three sessions later
10/06/04... S&P500 -1.6% three sessions later
09/10/04... S&P500 -0.3% three sessions later
04/05/04... S&P500 -1.0% three sessions later
01/20/04... S&P500 +0.2% three sessions later
10/09/03... S&P500 +1.0% three sessions later (*)
08/22/03... S&P500 +0.4% three sessions later
03/17/03... S&P500 +1.5% three sessions later (*)
12/02/02... S&P500 -3.0% three sessions later
03/08/02... S&P500 -0.9% three sessions later
11/26/01... S&P500 -1.5% three sessions later
10/17/01... S&P500 +1.2% three sessions later (*)
05/22/01... S&P500 -2.4% three sessions later
08/24/00... S&P500 +0.1% three sessions later
08/22/00... S&P500 +0.6% three sessions later (*)

The NASDAQ Volatility Index (VXN) closed right on the 20 mark Friday,
triggering the short-term sell setup for the NASDAQ outlined in last
Thursday's column. VXO also posted a lower close Friday, triggering the one-
day sell setup also discussed last Thursday.

Looking beyond the next couple of sessions, it's noteworthy that big board
volume has been running below average for most of the past two weeks, while
NASDAQ volume has been running mostly above-average. NASDAQ volume really
picked up in the last few days, with Friday marking the fifth consecutive
session in which volume increased from the previous session. That marks only
the twelfth separate time since 1990 that we've seen five consecutive days of
increasing volume on the NASDAQ. Interestingly, in every case but one this
pattern led to further upside one week later....

NASDAQ Volume Up Five Consecutive Sessions
05/16/08... Nasdaq100 ??? one week later
03/30/07... Nasdaq100 +2.0% one week later
11/03/05... Nasdaq100 +1.9% one week later
09/12/05... Nasdaq100 -1.6% one week later
07/11/05... Nasdaq100 +1.5% one week later
03/11/04... Nasdaq100 +1.1% one week later
06/02/03... Nasdaq100 +0.9% one week later
01/02/02... Nasdaq100 +2.7% one week later
09/10/99... Nasdaq100 +0.1% one week later
10/07/98... Nasdaq100 +7.4% one week later
01/09/92... Nasdaq100 +0.5% one week later
12/06/91... Nasdaq100 +1.8% one week later

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

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