Buyers Send the S&P500 Above the Previous Session’s High for the Sixth Consecutive Session

This morning’s rally pushed the S&P500 just above the previous session’s high, marking the sixth consecutive session of higher highs. This price pattern has been a fairly reliable indication of a short-term overbought market, and history suggests the S&P will close at a lower level 2-4 trading days later as buying pressure is generally exhausted for the short-term. The last thirty instances in which the SPX initially posted six consecutive higher highs are noted in the table below. Note that in 25 cases, or 83% of the time, the S&P closed at a lower level 2-4 trading days later, compared with 65% at-any-time odds for a lower S&P close 2-4 sessions later in the same time frame…

Six Consecutive Higher Highs for the S&P500
07/01/09… ???
03/17/09… Lower S&P close three sessions later
05/19/08… Lower S&P close two sessions later
08/24/07… Lower S&P close two sessions later
07/05/07… Lower S&P close three sessions later
02/06/07… Lower S&P close three sessions later
01/17/07… Lower S&P close two sessions later
03/15/06… Lower S&P close four sessions later
02/22/06… Lower S&P close two sessions later
06/17/05… Lower S&P close two sessions later
05/23/05… Lower S&P close two sessions later
12/16/04… Lower S&P close two sessions later
11/02/04… No lower close 2-4 sessions later
04/01/04… No lower close 2-4 sessions later
01/21/04… Lower S&P close two sessions later
01/05/04… Lower S&P close four sessions later
12/02/03… Lower S&P close three sessions later
11/03/03… Lower S&P close two sessions later
09/03/03… Lower S&P close two sessions later
08/22/03… No lower close 2-4 sessions later
03/20/03… Lower S&P close two sessions later
03/08/02… Lower S&P close three sessions later
02/14/02… Lower S&P close two sessions later
11/08/01… Lower S&P close two sessions later
04/18/01… Lower S&P close three sessions later
08/18/00… No lower close 2-4 sessions later
08/08/00… Lower S&P close two sessions later
07/14/00… Lower S&P close two sessions later
11/18/99… Lower S&P close two sessions later
10/11/99… Lower S&P close two sessions later
07/06/99… No lower close 2-4 sessions later

Categories : Archived Intraday Commentary, Intraday Commentary

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