Rotate!
By
Rennie on Monday, May 11th, 2009 at 9:25 pm
The S&P500 posted a solid 2% down day Monday, but it’s noteworthy that institutional selling pressure was virtually nonexistent. TICKscore settled at +7, Cumulative TICK +18,000. Overall volume hit its lowest level in over a week on both the NYSE and NASDAQ, reflecting the absence of large traders.
The two-week buy setup based on the Standand & Poors Oscillator was triggered at today’s close, suggesting the S&P will be trading above 909 on May 26th (the day after Memorial Day). See Sunday’s column for the recent track record.
The CBOE equity put/call ratio closed at .58 Monday, keeping the 10-day moving average in a clear downtrend. That means we could see the 1-2 day buy setup discussed in my February 26th column triggered at Tuesday’s close if S&P closes lower and the equity put/call ratio closes under .68.
Despite the solid drop for the S&P, note the clear rotation into tech stocks Monday, a generally bullish sign short-term. Even with the S&P sliding to a 2% loss, the NDX held on and managed to finish with a small gain Monday. This type of rotational action usually spells higher prices for the S&P looking out three trading days. Listed below are each of the last thirty instances in which the NDX settled down less than 0.5% (or managed a gain) on a day when the S&P fell 1%+. Note that in 26 out of 30 cases, or 87% of the time, the S&P closed at a higher level three sessions later, significantly greater than the 55% at-any-time odds for a higher S&P three sessions later?
S&P500 Drops 1%+, Nasdaq Down Less than 0.5%
05/11/09? S&P500 ??? three days later
04/27/09? S&P500 +1.8% three days later
03/19/09? S&P500 +2.8% three days later
02/20/09? S&P500 -0.7% three days later
10/29/08? S&P500 +3.9% three days later
10/10/08? S&P500 +1.0% three days later
10/08/08? S&P500 +1.9% three days later
08/12/08? S&P500 +0.7% 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
I’d also note that the 1-3 day buy setup discussed in this column from late April was also triggered at Monday’s close. Overall, it appears that downside potential is likely to be limited from current levels, with the S&P likely to rebound back above 909 heading into Thursday’s close. We remain in an environment dominated by speculators, as evidenced by the still-rising Nasdaq/NYSE Volume Ratio, which doesn’t bode well longer-term. But for the time being, institutions appear content to not spoil the party.
Rotate!
By Rennie on Monday, May 11th, 2009 at 9:25 pmThe S&P500 posted a solid 2% down day Monday, but it’s noteworthy that institutional selling pressure was virtually nonexistent. TICKscore settled at +7, Cumulative TICK +18,000. Overall volume hit its lowest level in over a week on both the NYSE and NASDAQ, reflecting the absence of large traders.
The two-week buy setup based on the Standand & Poors Oscillator was triggered at today’s close, suggesting the S&P will be trading above 909 on May 26th (the day after Memorial Day). See Sunday’s column for the recent track record.
The CBOE equity put/call ratio closed at .58 Monday, keeping the 10-day moving average in a clear downtrend. That means we could see the 1-2 day buy setup discussed in my February 26th column triggered at Tuesday’s close if S&P closes lower and the equity put/call ratio closes under .68.
Despite the solid drop for the S&P, note the clear rotation into tech stocks Monday, a generally bullish sign short-term. Even with the S&P sliding to a 2% loss, the NDX held on and managed to finish with a small gain Monday. This type of rotational action usually spells higher prices for the S&P looking out three trading days. Listed below are each of the last thirty instances in which the NDX settled down less than 0.5% (or managed a gain) on a day when the S&P fell 1%+. Note that in 26 out of 30 cases, or 87% of the time, the S&P closed at a higher level three sessions later, significantly greater than the 55% at-any-time odds for a higher S&P three sessions later?
S&P500 Drops 1%+, Nasdaq Down Less than 0.5%
05/11/09? S&P500 ??? three days later
04/27/09? S&P500 +1.8% three days later
03/19/09? S&P500 +2.8% three days later
02/20/09? S&P500 -0.7% three days later
10/29/08? S&P500 +3.9% three days later
10/10/08? S&P500 +1.0% three days later
10/08/08? S&P500 +1.9% three days later
08/12/08? S&P500 +0.7% 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
I’d also note that the 1-3 day buy setup discussed in this column from late April was also triggered at Monday’s close. Overall, it appears that downside potential is likely to be limited from current levels, with the S&P likely to rebound back above 909 heading into Thursday’s close. We remain in an environment dominated by speculators, as evidenced by the still-rising Nasdaq/NYSE Volume Ratio, which doesn’t bode well longer-term. But for the time being, institutions appear content to not spoil the party.