Reviewing the Weekly Charts of the S&P, Nasdaq
By
Rennie on Friday, May 15th, 2009 at 2:05 am
Noteworthy that the TED spread, the difference between 3-month LIBOR and 3-month T-bills, fell below 70 basis points for the first time since August 2007. We approached this level in May of last year as well, but the spread quickly bounced back after trying to break 70 bps (see long-term chart). That bearish action preceded the stock market’s massive slide over the next six months, with the TED spread peaking at over 400 bps. We’re under 70 now, which is a longer-term bullish sign as long as it remains below current levels. What you wouldn’t want to see is a repeat of last May’s action, when the spread briefly appeared to be calming down before it quickly reversed course.
Note from the weekly chart of the S&P500 that we’re in the process of forming an ‘inside week’. It’s typically a bullish development for the following week when the S&P posts an ‘inside down week’. The last thirty are listed in the table below…
Weekly SPX Forms Inside Bar, Closes Down
12/05/08… S&P500 +0.4% next week
09/26/08… S&P500 -9.4% next week
05/09/08… S&P500 +2.7% next week
06/22/07… S&P500 +0.1% next week
03/30/07… S&P500 +1.6% next week
06/23/06… S&P500 +2.1% next week
04/28/06… S&P500 +1.2% next week
12/02/05… S&P500 -0.5% next week
09/16/05… S&P500 -1.8% next week
12/10/04… S&P500 +0.5% next week
03/28/03… S&P500 +1.8% next week
05/24/02… S&P500 -1.5% next week
05/11/01… S&P500 +3.7% next week
03/09/01… S&P500 -6.7% next week
06/09/00… S&P500 +0.5% next week
03/31/00… S&P500 +1.2% next week
01/21/00… S&P500 -5.6% next week
12/10/99… S&P500 +0.3% next week
11/26/99… S&P500 +1.2% next week
01/22/99… S&P500 +4.4% next week
11/13/98… S&P500 +3.4% next week
12/26/97… S&P500 +4.1% next week
11/28/97… S&P500 +3.0% next week
10/24/97… S&P500 -2.9% next week
09/12/97… S&P500 +2.9% next week
08/29/97… S&P500 +3.3% next week
07/26/96… S&P500 +4.2% next week
06/14/96… S&P500 +0.2% next week
03/29/96… S&P500 +1.6% next week
10/06/95… S&P500 +0.4% next week
Note that an inside down week was followed by an up week 77% of the time, compared with at-any-time odds of 56% for a higher weekly close. For this setup to be triggered, the S&P needs to hold above last week’s low at SPX 879.21 during Friday’s session.
While on the subject of the weekly charts, I’d add that the 5-week RSI for the Nasdaq100 (NDX) recently triggered a bullish signal by closing above the 80 level. Such a high reading reflects an unusually strong intermediate-term trend, which is usually a good sign that another higher weekly close is forthcoming. The table below lists each of the last thirty separate instances in which the NDX 5-week RSI closed over 80 (meaning it moved from under 80 to over 80.) This identifies periods in which the intermediate-term trend has turned unusually strong, and rather than focus on the overbought status of the market, the more reliable trade has been to trade with the trend. Out of the last thirty instances in which the NDX 5-week RSI closed over 80, all but two led to a higher weekly close (above the setup week) within the next three weeks. That 93% win rate is well above the 74% at-any-time odds for a higher weekly NDX close within three weeks…
Nasdaq100 5-week RSI Closes over 80
05/01/09… ???
10/05/07… Higher weekly close one week later
07/13/07… Higher weekly close one week later
06/01/07… Higher weekly close two weeks later
11/17/06… Higher weekly close one week later
10/13/06… Higher weekly close four weeks later
11/25/05… Higher weekly close one week later
11/05/04… Higher weekly close one week later
01/09/04… Higher weekly close one week later
09/19/03… Higher weekly close three weeks later
07/11/03… Higher weekly close six weeks later
06/06/03… Higher weekly close two weeks later
11/22/02… Higher weekly close one week later
03/03/00… Higher weekly close one week later
01/21/00… Higher weekly close two weeks later
11/12/99… Higher weekly close one week later
07/09/99… Higher weekly close one week later
04/01/99… Higher weekly close one week later
11/27/98… Higher weekly close one week later
07/02/98… Higher weekly close one week later
04/03/98… Higher weekly close three weeks later
02/20/98… Higher weekly close one week later
07/11/97… Higher weekly close one week later
06/20/97… Higher weekly close two weeks later
05/23/97… Higher weekly close three weeks later
11/08/96… Higher weekly close one week later
09/20/96… Higher weekly close one week later
05/17/96… Higher weekly close two weeks later
05/12/95… Higher weekly close one week later
03/10/95… Higher weekly close one week later
02/10/95… Higher weekly close three weeks later
Note that this setup was triggered on May 1st and remains in effect, continuing to suggest we’ll see a weekly NDX close back above 1396 this week or the next.
Reviewing the Weekly Charts of the S&P, Nasdaq
By Rennie on Friday, May 15th, 2009 at 2:05 amNoteworthy that the TED spread, the difference between 3-month LIBOR and 3-month T-bills, fell below 70 basis points for the first time since August 2007. We approached this level in May of last year as well, but the spread quickly bounced back after trying to break 70 bps (see long-term chart). That bearish action preceded the stock market’s massive slide over the next six months, with the TED spread peaking at over 400 bps. We’re under 70 now, which is a longer-term bullish sign as long as it remains below current levels. What you wouldn’t want to see is a repeat of last May’s action, when the spread briefly appeared to be calming down before it quickly reversed course.
Note from the weekly chart of the S&P500 that we’re in the process of forming an ‘inside week’. It’s typically a bullish development for the following week when the S&P posts an ‘inside down week’. The last thirty are listed in the table below…
Weekly SPX Forms Inside Bar, Closes Down
12/05/08… S&P500 +0.4% next week
09/26/08… S&P500 -9.4% next week
05/09/08… S&P500 +2.7% next week
06/22/07… S&P500 +0.1% next week
03/30/07… S&P500 +1.6% next week
06/23/06… S&P500 +2.1% next week
04/28/06… S&P500 +1.2% next week
12/02/05… S&P500 -0.5% next week
09/16/05… S&P500 -1.8% next week
12/10/04… S&P500 +0.5% next week
03/28/03… S&P500 +1.8% next week
05/24/02… S&P500 -1.5% next week
05/11/01… S&P500 +3.7% next week
03/09/01… S&P500 -6.7% next week
06/09/00… S&P500 +0.5% next week
03/31/00… S&P500 +1.2% next week
01/21/00… S&P500 -5.6% next week
12/10/99… S&P500 +0.3% next week
11/26/99… S&P500 +1.2% next week
01/22/99… S&P500 +4.4% next week
11/13/98… S&P500 +3.4% next week
12/26/97… S&P500 +4.1% next week
11/28/97… S&P500 +3.0% next week
10/24/97… S&P500 -2.9% next week
09/12/97… S&P500 +2.9% next week
08/29/97… S&P500 +3.3% next week
07/26/96… S&P500 +4.2% next week
06/14/96… S&P500 +0.2% next week
03/29/96… S&P500 +1.6% next week
10/06/95… S&P500 +0.4% next week
Note that an inside down week was followed by an up week 77% of the time, compared with at-any-time odds of 56% for a higher weekly close. For this setup to be triggered, the S&P needs to hold above last week’s low at SPX 879.21 during Friday’s session.
While on the subject of the weekly charts, I’d add that the 5-week RSI for the Nasdaq100 (NDX) recently triggered a bullish signal by closing above the 80 level. Such a high reading reflects an unusually strong intermediate-term trend, which is usually a good sign that another higher weekly close is forthcoming. The table below lists each of the last thirty separate instances in which the NDX 5-week RSI closed over 80 (meaning it moved from under 80 to over 80.) This identifies periods in which the intermediate-term trend has turned unusually strong, and rather than focus on the overbought status of the market, the more reliable trade has been to trade with the trend. Out of the last thirty instances in which the NDX 5-week RSI closed over 80, all but two led to a higher weekly close (above the setup week) within the next three weeks. That 93% win rate is well above the 74% at-any-time odds for a higher weekly NDX close within three weeks…
Nasdaq100 5-week RSI Closes over 80
05/01/09… ???
10/05/07… Higher weekly close one week later
07/13/07… Higher weekly close one week later
06/01/07… Higher weekly close two weeks later
11/17/06… Higher weekly close one week later
10/13/06… Higher weekly close four weeks later
11/25/05… Higher weekly close one week later
11/05/04… Higher weekly close one week later
01/09/04… Higher weekly close one week later
09/19/03… Higher weekly close three weeks later
07/11/03… Higher weekly close six weeks later
06/06/03… Higher weekly close two weeks later
11/22/02… Higher weekly close one week later
03/03/00… Higher weekly close one week later
01/21/00… Higher weekly close two weeks later
11/12/99… Higher weekly close one week later
07/09/99… Higher weekly close one week later
04/01/99… Higher weekly close one week later
11/27/98… Higher weekly close one week later
07/02/98… Higher weekly close one week later
04/03/98… Higher weekly close three weeks later
02/20/98… Higher weekly close one week later
07/11/97… Higher weekly close one week later
06/20/97… Higher weekly close two weeks later
05/23/97… Higher weekly close three weeks later
11/08/96… Higher weekly close one week later
09/20/96… Higher weekly close one week later
05/17/96… Higher weekly close two weeks later
05/12/95… Higher weekly close one week later
03/10/95… Higher weekly close one week later
02/10/95… Higher weekly close three weeks later
Note that this setup was triggered on May 1st and remains in effect, continuing to suggest we’ll see a weekly NDX close back above 1396 this week or the next.