Maintaining a Bullish Bias

After reviewing the action over the past few days, I'm inclined to maintain a
bullish bias. Wednesday saw S&P futures gap higher at the open and never look
back, leaving an unfilled upside gap on the daily chart. But Tuesday was the
really strong session. Breadth was lopsided that day as advancers led
decliners by more than a 3:1 margin, and upside volume accounted for over 80%
of total volume. NYSE TICK action was equally strong Tuesday, with our
TICKscore indicator settling at +30 and cumulative TICK at +100,369. That high
cumulative TICK reading triggered a two-week buy setup similar to the one
triggered on July 16th (and which fell off the board Wednesday). Institutions
have remained consistently better buyers, which should keep stocks moving
generally higher heading into mid-August.

NYSE Cumulative TICK Hits a Two-Month High
07/29/08... S&P500 ??? two weeks later
07/16/08... S&P500 +3.1% two weeks later
04/16/08... S&P500 +1.5% two weeks later
03/18/08... S&P500 +2.8% two weeks later
11/28/07... S&P500 +1.2% two weeks later
06/27/07... S&P500 +2.8% two weeks later
05/02/07... S&P500 +1.2% two weeks later
04/05/07... S&P500 +2.8% two weeks later
03/20/07... S&P500 +1.9% two weeks later
10/12/06... S&P500 +1.9% two weeks later
10/04/06... S&P500 +1.2% two weeks later
07/19/06... S&P500 +1.5% two weeks later
06/01/06... S&P500 -2.3% two weeks later
04/18/06... S&P500 +0.4% two weeks later
01/03/06... S&P500 +0.7% two weeks later
11/02/05... S&P500 +1.4% two weeks later
05/18/05... S&P500 +1.6% two weeks later
02/04/05... S&P500 -0.1% two weeks later
01/31/05... S&P500 +2.1% two weeks later
11/04/04... S&P500 +1.9% two weeks later
05/25/04... S&P500 +1.6% two weeks later
05/11/04... S&P500 +1.6% two weeks later
02/06/04... S&P500 -0.2% two weeks later
12/29/03... S&P500 +1.1% two weeks later
10/01/03... S&P500 +2.8% two weeks later
08/28/03... S&P500 +1.6% two weeks later
07/02/03... S&P500 -1.2% two weeks later
04/22/03... S&P500 +2.5% two weeks later
04/17/03... S&P500 +4.1% two weeks later
04/14/03... S&P500 +3.7% two weeks later
01/06/03... S&P500 -4.5% two weeks later

I'd also add that if the S&P holds above 1263 at Friday's close, another
intermediate-term bullish setup would be triggered, the same one recently
triggered on July 21st (see my July 20th column for details.)

Short-term, Thursday's relatively strong showing by the NASDAQ has positive
implications. The NDX settled down a mere 0.2% vs. a 1.3% drop for the S&P.
When the S&P500 closes down 1% or more, the Nasdaq100 (NDX) typically suffers
a similarly large loss given its more volatile nature. But watch for those
times when the NDX manages to hold firm on a solid down day for the S&P, as
this divergent activity suggests only a limited amount selling pressure and/or
a short-term rotation into tech stocks. Typically, the market is trading
higher three sessions later...

S&P500 Drops 1%+, Nasdaq Down Less than 0.5%
07/31/08... S&P500 ??? three days later
07/15/08... S&P500 +3.8% three days later
05/23/08... S&P500 +1.6% three days later
06/13/06... S&P500 +2.3% three days later
05/12/05... S&P500 +1.2% three days later
03/09/05... S&P500 -0.0% three days later
04/16/03... S&P500 +3.6% three days later
01/22/03... S&P500 -3.5% three days later
10/09/02... S&P500 +8.3% three days later
09/24/02... S&P500 +1.0% three days later
04/29/02... S&P500 +1.8% three days later
03/06/00... S&P500 +0.8% three days later
02/16/00... S&P500 -2.6% three days later
05/27/99... S&P500 +1.1% three days later
01/14/99... S&P500 +3.7% three days later
07/09/97... S&P500 +1.2% three days later
03/13/97... S&P500 +0.0% three days later
04/10/96... S&P500 +1.4% three days later
02/20/96... S&P500 +2.9% three days later
01/10/96... S&P500 +0.2% three days later
06/24/94... S&P500 +1.1% three days later
04/01/91... S&P500 +2.3% three days later
01/09/91... S&P500 +0.3% three days later
01/02/91... S&P500 -3.4% three days later
07/05/90... S&P500 +0.2% three days later

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

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