Intraday Update (Why Today’s Close Matters)

Key from an intermediate-term perspective is whether the S&P closes higher today. If it does, it would represent immediate follow-through after a significant buying session. Note the large range for the S&P on Monday, with over 25 points separating the intraday high and low. That’s the largest range in over a month, and breadth was lopsided positive by a 5:1 margin. Looking back at previous sessions in which the S&P posted a ‘WR20 session’ (widest range of last twenty sessions) and breadth finished at least 3:1 positive, it’s generally a positive sign looking out the next couple of weeks. But it’s dramatically more reliable when the S&P follows through immediately with another higher close the following day. When this occurs, there’s little doubt about who’s in control of the tape, and invariably the S&P is trading higher two weeks later. The last thirty occurrences are listed in the table below…

S&P Closes Higher after WR20 Day w/ 3:1+ Positive Breadth
08/11/08… S&P500 -3.0% two weeks later
07/17/08… S&P500 +0.6% two weeks later
09/19/07… S&P500 +0.7% two weeks later
11/07/06… S&P500 +1.4% two weeks later
10/05/06… S&P500 +1.0% two weeks later
09/13/06… S&P500 +1.4% two weeks later
04/19/06… S&P500 -0.2% two weeks later
01/04/06… S&P500 +0.9% two weeks later
11/05/04… S&P500 +0.4% two weeks later
05/26/04… S&P500 +1.9% two weeks later
10/02/03… S&P500 +2.9% two weeks later
03/17/00… S&P500 +2.3% two weeks later
10/16/98… S&P500 +4.0% two weeks later
04/30/97… S&P500 +4.3% two weeks later
02/06/95… S&P500 +0.3% two weeks later
12/24/91… S&P500 +4.6% two weeks later
01/18/91… S&P500 +3.3% two weeks later
05/14/90… S&P500 +1.7% two weeks later
05/15/89… S&P500 +0.9% two weeks later
01/05/89… S&P500 +2.5% two weeks later
09/06/88… S&P500 +1.6% two weeks later
06/01/88… S&P500 +2.9% two weeks later
01/06/87… S&P500 +6.4% two weeks later
01/05/87… S&P500 +6.8% two weeks later
03/12/86… S&P500 +2.1% two weeks later
12/16/85… S&P500 -0.4% two weeks later
05/13/85… S&P500 +1.8% two weeks later
01/22/85… S&P500 +2.9% two weeks later
08/06/84… S&P500 +1.4% two weeks later
08/03/84… S&P500 +1.1% two weeks later

Note that in 27 out of 30 cases, or 90% of the time, the S&P was trading at an even higher level two weeks later. That’s significantly above the 58% at-any-time odds for a higher S&P500 two weeks later. When the market has followed through with another higher close immediately after a bullish ‘wide range’ session, it’s been a very reliable indication of further upside over the next ten trading days.

Categories : Archived Intraday Commentary, Intraday Commentary

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