NASDAQ Outperformance a Positive Sign for the Short-term

Major market averages settled lower Tuesday, led by a sharp 6%+ selloff in the
banking sector. Despite the selloff in the financials, volume remained
subdued, with NYSE volume falling to its lowest level in over a month.
TICKscore closed at -4, Cumulative TICK settled at -31,000. Note that while
the 20-day moving average of the Cumulative TICK remains in an uptrend, some
of those big positive readings from mid-July will start falling off the 20-day
moving average calculation in the days ahead. That suggests the average could
begin topping out soon.

On a short-term basis, it was a positive sign to see the Nasdaq remain on firm
ground in the face of a solid down day for the S&P. The NDX settled
essentially unchanged on the session, indicating selling pressure was limited
to the financial sector and that the recent rotation into tech remains in
effect. The table below lists every instance since 1990 in which the S&P
closed down 1% or more and the NDX settled down less than 0.5%, as was the
case Tuesday. Note that in 21 out of 25 cases, or 84% of the time, the S&P was
trading at a higher level three sessions later. This suggests downside
potential is likely to be limited over the short-term, and that the S&P is
likely to be trading above today's settlement of 1289 at Friday's close. The
S&P has been particularly choppy over the last few weeks, with rallies and
selloffs rarely lasting more than a couple of sessions. That pattern looks
like it will remain in effect for the time being...

S&P500 Drops 1%+, Nasdaq Down Less than 0.5%
08/12/08... S&P500 ??? three days later
07/31/08... S&P500 +1.4% 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

 Print This Post