NDX Posts an NR10 Session Despite 2:1 Positive Breadth, a Short-term Negative

TICKscore settled at +36 Thursday, Cumulative TICK settled at +51,000. Note
that the 20-day moving average of the Cumulative TICK remains in an uptrend.
Also interesting to note that the Equal Weight S&P500 outperformed the SPX for
the second day in a row, the first time we've seen back-to-back days of
outperformance by the Equal Weight index since mid-September. On the negative
side, the NASDAQ/NYSE Volume Ratio closed at its highest level in two months,
keeping the 20-day moving average well above the 1.50 level (historically
market topping territory).

For the first time in nearly three months, the stock market is trying to hold
steady in the three days following a 3:1+ positive breadth. Whether the S&P
remains above SPX 940 at Friday's close remains to be seen, but if it does it
would represent follow-through, something that's been notably missing
following all recent 3:1+ positive breadth days. Historically, a higher S&P
three days after a 3:1 positive breadth day typically precedes a rally over
the next two weeks.

We did see some short-term negative developments on Thursday, as the Nasdaq100
posted its narrowest-range day of the past two weeks. That's not the kind of
session that typically coincides with 2:1 positive breadth. This combination
has only occurred fourteen times since 1990, all of which are listed in the
table below...

Nasdaq Breadth 2:1 Positive & NDX 'NR10' Session
10/30/08... ???
10/20/08... Lower NDX close one session later
08/28/08... Lower NDX close one session later
08/22/08... Lower NDX close one session later
11/23/07... Lower NDX close one session later
04/19/05... Lower NDX close one session later
01/31/05... Lower NDX close three sessions later
01/14/05... Lower NDX close two sessions later
07/29/04... Lower NDX close three sessions later
05/11/04... Lower NDX close one session later
03/17/04... Lower NDX close one session later
10/15/02... Lower NDX close one session later
05/14/02... Lower NDX close four sessions later
12/08/00... Lower NDX close two sessions later
11/24/00... Lower NDX close one session later

Note that the NDX posted a subsequently lower close within the next few
sessions in 13 out of 14 cases.

The significant underperformance by the bank sector is another short-term
negative. Despite the S&P tacking on 2.6%, the Bank Index (BKX) barely managed
an up day, settling up 0.6%. When the S&P gains 1%+ and doubles the
performance of the BKX, it typically leads to a lower S&P close within the
next two sessions. The last thirty occurrences are listed in the table
below...

SPX Up 1%+, Doubles Performance of BKX
10/30/08... ???
10/23/08... Lower SPX close one session later
10/20/08... Lower SPX close one session later
10/13/08... Lower SPX close one session later
06/13/08... Lower SPX close two sessions later
03/24/08... Lower SPX close two sessions later
02/13/08... Lower SPX close one session later
01/14/08... Lower SPX close one session later
10/31/07... Lower SPX close one session later
08/24/07... Lower SPX close one session later
08/22/07... Lower SPX close one session later
03/06/07... Lower SPX close one session later
05/25/06... Lower SPX close two sessions later
04/21/05... Lower SPX close one session later
11/12/03... Lower SPX close one session later
05/09/03... No lower close within two sessions
04/10/02... Lower SPX close one session later
10/03/01... Lower SPX close one session later
08/24/01... Lower SPX close one session later
07/25/01... No lower close within two sessions
06/05/01... Lower SPX close one session later
05/21/01... Lower SPX close one session later
04/25/01... No lower close within two sessions
04/19/01... Lower SPX close one session later
04/17/01... No lower close within two sessions
01/18/01... Lower SPX close one session later
12/27/00... Lower SPX close two sessions later
11/14/00... Lower SPX close two sessions later
08/07/00... Lower SPX close two sessions later
06/13/00... No lower close within two sessions
05/05/00... Lower SPX close one session later

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

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