When the SPX Outperforms the Equal Weight S&P by more than 0.7%

One of the more noteworthy developments on Monday was the relative weakness of
the Equal Weight S&P500 compared to the standard cap-weighted S&P. The Equal
Weight index, which assigns a fixed 0.2% weighting to each of the 500
components, fell just over 2% Monday, far worse than the 1.3% drop for the
SPX. Historically, such underperformance has not been a positive sign for the
short-term. The last thirty instances in which the SPXEW underperformed the
SPX by at least 0.7% are listed in the table below, along with the performance
of the S&P over the next two sessions. Note that in 23 out of 30 cases, or 77%
of the time, the S&P was trading at a lower level two sessions later. That's
significantly greater than the 50% at-any-time odds for a lower S&P close two
days later...

SPX Outperforms Equal Weight S&P By >0.7%
11/10/08... S&P500 ??? two sessions later
10/23/08... S&P500 -6.5% two sessions later
10/02/08... S&P500 -5.2% two sessions later
09/22/08... S&P500 -1.8% two sessions later
07/24/08... S&P500 -1.5% two sessions later
03/17/08... S&P500 +1.7% two sessions later
10/03/05... S&P500 -2.5% two sessions later
03/25/03... S&P500 -0.7% two sessions later
12/04/02... S&P500 -0.6% two sessions later
11/08/02... S&P500 -1.3% two sessions later
11/07/02... S&P500 -2.9% two sessions later
11/05/02... S&P500 -1.4% two sessions later
10/16/02... S&P500 +2.8% two sessions later
10/09/02... S&P500 +7.5% two sessions later
10/01/02... S&P500 -3.4% two sessions later
07/31/02... S&P500 -5.2% two sessions later
07/26/02... S&P500 +5.9% two sessions later
07/17/02... S&P500 -6.4% two sessions later
07/02/02... S&P500 +4.3% two sessions later
06/12/02... S&P500 -1.3% two sessions later
05/08/02... S&P500 -3.1% two sessions later
09/26/01... S&P500 +3.4% two sessions later
09/17/01... S&P500 -2.2% two sessions later
09/10/01... S&P500 -5.5% two sessions later
03/27/01... S&P500 -2.9% two sessions later
03/13/01... S&P500 -2.0% two sessions later
01/18/01... S&P500 -0.4% two sessions later
01/03/01... S&P500 -3.7% two sessions later
12/05/00... S&P500 -2.4% two sessions later
11/14/00... S&P500 -0.8% two sessions later
10/19/00... S&P500 +0.5% two sessions later

TICKscore settled at -57 Monday, Cumulative TICK -90,500. Note that the 20-day
moving average of the Cumulative TICK looks like it's putting in a top, which
doesn't bode well for the market's longer-term prospects. Intermediate-term
setups suggest we'll see one more run up near the SPX 1000 level after the
market works through the current chop, but beyond that there's little evidence
of a meaningful bottom.

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

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