Nasdaq Shrugs Off SOX Weakness, Closes Higher

Following Monday’s unfilled downside gap, Nasdaq futures closed higher Tuesday but posted a lower high. That’s not a particularly positive price pattern. Listed below are all instances in which the same price pattern was observed since the inception of the Nasdaq futures contract…

Nas Futures Close Up, Post Lower High after Unfilled Down Gap
04/21/09… ???
01/08/09… Lower NDX close one session later
12/02/08… Lower NDX close two sessions later
11/07/08… Lower NDX close one session later
01/23/08… Lower NDX close two sessions later
02/28/07… Lower NDX close one session later
02/06/06… Lower NDX close one session later
08/31/04… No lower close in next 1-2 sessions
08/09/04… No lower close in next 1-2 sessions
07/07/04… Lower NDX close one session later
09/11/03… Lower NDX close two sessions later
04/01/03… No lower close in next 1-2 sessions
09/13/02… Lower NDX close one session later
09/04/02… Lower NDX close one session later
02/20/02… Lower NDX close one session later
12/21/01… Lower NDX close one session later
07/09/01… Lower NDX close one session later
06/15/01… Lower NDX close one session later
02/12/01… Lower NDX close one session later
10/26/00… Lower NDX close two sessions later
05/22/00… Lower NDX close one session later
07/21/99… Lower NDX close one session later
01/22/99… No lower close in next 1-2 sessions
10/02/98… Lower NDX close one session later

The results are interesting in that there’s a tendency for a lower Nasdaq close within the next couple of days, although the sample is too small to be considered significant. Still, I’m inclined to believe we will see a Nasdaq close below today’s settlement given today’s underperformance by the semiconductor sector. The SOX barely managed a gain Monday, settling up 0.2% vs. a 1.5% gain for the Nasdaq100. Historically, it’s not a short-term positive sign when the SOX underperforms by such a wide margin. In the table below I’ve noted each of the last thirty instances in which the NDX closed up 1% or more and the SOX settled with a gain of less than 0.5% (or closed lower)…

NDX Gains 1%+, SOX Gains Less Than 0.5% or Settles Lower
04/21/09… ???
02/03/09… Lower NDX close one session later
01/08/09… Lower NDX close one session later
07/01/08… Lower NDX close one session later
01/31/08… Lower NDX close two sessions later
01/09/08… Lower NDX close two sessions later
12/21/07… Lower NDX close three sessions later
11/16/07… Lower NDX close one session later
10/26/07… No lower close within three sessions
10/23/07… Lower NDX close one session later
08/02/07… Lower NDX close one session later
05/16/07… Lower NDX close one session later
03/14/07… Lower NDX close two sessions later
01/11/07… Lower NDX close three sessions later
09/20/06… Lower NDX close one session later
05/25/06… Lower NDX close two sessions later
10/19/05… Lower NDX close one session later
11/22/04… Lower NDX close one session later
04/22/04… Lower NDX close two sessions later
09/02/03… Lower NDX close one session later
06/11/03… Lower NDX close two sessions later
02/21/03… Lower NDX close one session later
12/06/02… Lower NDX close one session later
10/14/02… No lower close within three sessions
09/09/02… Lower NDX close three sessions later
08/29/02… Lower NDX close one session later
08/22/02… Lower NDX close one session later
07/26/02… No lower close within three sessions
07/17/02… Lower NDX close one session later
06/05/02… Lower NDX close one session later
05/23/02… Lower NDX close one session later

Note that in 27 out of 30 cases, or 90% of the time, the NDX posted a subsequently lower close (below the setup day) within the next three sessions (and usually within the next two). That’s significantly above the 68% at-any-time odds for a lower NDX close within three days, suggesting we’ll see some of today’s gains given back over the short-term.

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

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