Nasdaq Posts Higher Highs and Higher Lows Despite 3:2 Negative Breadth

Stocks settled lower Tuesday as choppy conditions have prevailed since the
beginning of the week. NYSE TICK action remained negative. Our TICKscore
indicator settled at -10 Tuesday, erasing the gains from Monday's session.
Cumulative TICK settled at -33,000, keeping the 20-day average in a downtrend.

NYSE volume was down for a fourth consecutive session Tuesday, hitting its
lowest level in over a month. While the S&P posted an outside bar on its daily
chart, the NASDAQ outperformed. Breadth on the NASDAQ was negative by more
than a 3:2 margin, yet the NDX posted higher highs and higher lows as well as
an NR10 bar, meaning Tuesday's intraday range was the smallest of the past ten
days.

Historically, the ability of the NDX to shrug off weak breadth statistics and
post what some call a 'rally day' (higher highs, higher lows) has had bullish
implications short-term. There have been a total of 47 occurrences since 1990,
the last thirty of which are listed in the table below, along with the
performance of the Nasdaq100 over the next two sessions...

NDX Higher High & Higher Low Despite 3:2 Neg Breadth
06/17/08... NDX ??? two sessions later
03/19/08... NDX +5.8% two sessions later
02/28/08... NDX -3.4% two sessions later
02/21/08... NDX +1.1% two sessions later
10/30/07... NDX -0.5% two sessions later
09/24/07... NDX +1.5% two sessions later
07/16/07... NDX +0.5% two sessions later
05/17/07... NDX +1.4% two sessions later
05/14/07... NDX +0.2% two sessions later
11/09/06... NDX +1.6% two sessions later
10/20/06... NDX +0.3% two sessions later
08/09/06... NDX +0.1% two sessions later
07/27/06... NDX +2.1% two sessions later
04/03/06... NDX +1.5% two sessions later
10/20/05... NDX +2.3% two sessions later
07/21/05... NDX -0.5% two sessions later
05/12/05... NDX +1.8% two sessions later
04/08/05... NDX +0.2% two sessions later
01/13/05... NDX +1.8% two sessions later
10/19/04... NDX +2.2% two sessions later
10/13/04... NDX -0.2% two sessions later
10/07/04... NDX -1.2% two sessions later
09/08/04... NDX +2.6% two sessions later
05/07/04... NDX +1.1% two sessions later
03/02/04... NDX +0.6% two sessions later
02/12/04... NDX +0.4% two sessions later
01/22/04... NDX +1.5% two sessions later
08/22/03... NDX +0.4% two sessions later
07/22/03... NDX -0.3% two sessions later
02/26/03... NDX +3.6% two sessions later
10/02/02... NDX -4.0% two sessions later

Out of a total of 47 occurrences, 37 led to a higher NDX close two sessions
later. That 79% win rate is significantly better than the 53% 'at-any-time'
odds of a higher NDX close two sessions later, indicating that when the NDX
manages to hold its own in the face of negative breadth, more often than not
there's further upside in store over the next couple of days.

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

 Print This Post