S&P500 Follows Through with a Higher Close on the Heels of Monday’s 90% Up Volume Session

Cumulative TICKscore pushed into new highs for the year on Monday and extended that move with today’s +25 closing TICKscore reading. Institutions remain better buyers, and until that changes the market is likely to retain its underlying bid. Cumulative TICK closed at 84,000 Tuesday. Note that the 20-day moving average looks like it could be bottoming out. One supportive factor is that the flat-to-negative readings from mid-June will be falling off the average over the coming week.

As noted in today’s intraday update, it was important to monitor the S&P close in light of Monday’s wide range session. Given that we did indeed close higher, the two-week buy setup discussed in that column went into effect at Tuesday’s close. Key to that setup is the wide range bar – just buying on any higher close after a 3:1+ positive breadth session doesn’t work. It’s when the market follows through with a higher close immediately after a wide range bar that odds dramatically shift in favor of further upside over the next ten trading days.

One of the more significant developments on a very short-term basis is the fact that S&P futures appear poised to post a second consecutive open above the previous day’s high (S&Ps currently +8). Should S&P futures open +2 or more on Wednesday (a tick above today’s high at 903.30), it would be a bullish indication for Thursday’s session. It  doesn’t tell us anything regarding how the market will close Wednesday, but it would indicate buyers are likely to make their presence felt again on Thursday.  When S&P futures post back-to-back sessions with an open above the previous day’s high, it’s a sign of strength for the following session. The last thirty times the front-month S&Ps opened above the previous day’s high on two consecutive sessions are listed in the table below, along with the S&P’s performance the following session. Note that in 24 out of the last 30 occurrences, or 80% of the time, the S&P500 closed higher the next day, significantly above the 55% at-any-time odds for a higher S&P close one day later…

S&P Futures Open >Previous Session’s High Two Days
06/01/09… S&P500 +0.4% next day
05/07/09… S&P500 +2.4% next day
03/16/09… S&P500 +3.2% next day
12/31/08… S&P500 +3.2% next day
11/25/08… S&P500 +3.5% next day
10/14/08… S&P500 -9.0% next day
05/14/08… S&P500 +1.1% next day
04/16/08… S&P500 +0.1% next day
04/02/08… S&P500 +0.1% next day
03/19/08… S&P500 +2.4% next day
01/25/08… S&P500 +1.8% next day
12/24/07… S&P500 +0.1% next day
10/29/07… S&P500 -0.7% next day
09/27/07… S&P500 -0.3% next day
09/19/07… S&P500 -0.7% next day
08/23/07… S&P500 +1.2% next day
06/01/07… S&P500 +0.2% next day
04/17/07… S&P500 +0.1% next day
04/16/07… S&P500 +0.2% next day
03/09/07… S&P500 +0.3% next day
08/16/06… S&P500 +0.2% next day
08/15/06… S&P500 +0.8% next day
06/30/06… S&P500 +0.8% next day
05/26/06… S&P500 -1.6% next day
12/27/05… S&P500 +0.1% next day
11/18/05… S&P500 +0.5% next day
02/01/05… S&P500 +0.3% next day
10/04/04… S&P500 -0.1% next day
05/19/04… S&P500 +0.1% next day
09/03/03… S&P500 +0.2% next day

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

 Print This Post