S&P Trying For a Fifth Consecutive Up Week
By
Rennie on Friday, August 14th, 2009 at 12:57 am
The S&P500 closed at a fresh six-month high Thursday, an indication we’re likely to see range-bound trade on Friday. Each of the last thirty instances in which the S&P500 initially closed at a six-month high (meaning it did not close at a six-month high the previous session) are listed in the table below, along with the performance of the S&P the next day. Note the definitive tendency for the market to settle near unchanged levels the next day. Not once out of the last thirty cases did the S&P gain 0.5% or more the next day, and in only three cases did it lose 0.5% or more…
S&P500 Closes at a Six-Month High
08/13/09… S&P ??? next session
08/07/09… S&P -0.3% next session
07/30/09… S&P +0.1% next session
07/23/09… S&P +0.3% next session
07/20/09… S&P +0.4% next session
06/11/09… S&P +0.1% next session
06/01/09… S&P +0.2% next session
10/09/07… S&P -0.2% next session
10/05/07… S&P -0.3% next session
07/19/07… S&P -1.2% next session
07/12/07… S&P +0.3% next session
05/30/07… S&P +0.0% next session
05/18/07… S&P +0.2% next session
05/16/07… S&P -0.1% next session
05/09/07… S&P -1.4% next session
05/02/07… S&P +0.4% next session
04/25/07… S&P -0.1% next session
04/20/07… S&P -0.2% next session
04/16/07… S&P +0.2% next session
02/20/07… S&P -0.1% next session
02/14/07… S&P +0.1% next session
02/07/07… S&P -0.1% next session
02/01/07… S&P +0.2% next session
01/24/07… S&P -1.1% next session
01/12/07… S&P +0.1% next session
12/14/06… S&P +0.1% next session
12/04/06… S&P +0.4% next session
11/21/06… S&P +0.2% next session
11/14/06… S&P +0.2% next session
10/23/06… S&P +0.0% next session
10/12/06… S&P +0.2% next session
While Thursday’s rally in the banks could be interpreted as a bullish reaction to the Fed, it’s interesting that similar action over the past decade has been more of a head-fake than the start of a sustained rally. Out of the 20 instances since 1998 in which the BKX closed up 1% or more immediately following an ‘FOMC Day’, the sector typically struggled over the next week. Two-thirds of the time the BKX was lower five trading days later, and in only two cases did the BKX manage a gain of more than 1.5%. It lost more than 1.5% ten times…
BKX +1% FOllowing FOMC Announcement Day
08/13/09… BKX ??? one week later
06/25/09… BKX -3.2% one week later
05/01/08… BKX -5.6% one week later
01/31/08… BKX -4.5% one week later
08/08/07… BKX -7.9% one week later
05/04/05… BKX -1.4% one week later
03/17/04… BKX -3.2% one week later
06/26/03… BKX -0.1% one week later
03/19/03… BKX -0.4% one week later
09/25/02… BKX +0.5% one week later
08/14/02… BKX +2.3% one week later (*)
06/27/02… BKX +0.4% one week later
05/08/02… BKX +1.5% one week later
01/31/02… BKX -6.5% one week later
06/28/01… BKX -2.1% one week later
05/16/01… BKX +1.4% one week later
03/22/00… BKX +1.7% one week later (*)
10/06/99… BKX -5.7% one week later
05/19/99… BKX -4.2% one week later
12/23/98… BKX -0.7% one week later
05/20/98… BKX -3.2% one week later
New 20-day highs as well as new 52-week highs have been tracing out a pattern of ‘lower highs’ since the beginning of August, suggesting the current rally will need to pause and regroup before the uptrend can continue. Also noteworthy that the S&P is attempting to post its fifth consecutive higher close on the weekly chart. Should the SPX manage to hold above 1010, it would suggest limited upside potential next week. The table below lists each of the last thirty occurrences in which the S&P500 initially posted five consecutive higher closes on its weekly chart…
S&P500 Up Five Consecutive Weeks
04/09/09… S&P500 +1.5% one week later
10/12/07… S&P500 -3.9% one week later
05/04/07… S&P500 +0.0% one week later
10/27/06… S&P500 -1.0% one week later
11/25/05… S&P500 -0.3% one week later
07/29/05… S&P500 -0.6% one week later
09/10/04… S&P500 +0.4% one week later
12/26/03… S&P500 +1.2% one week later
05/16/03… S&P500 -1.2% one week later
08/23/02… S&P500 -2.6% one week later
09/01/00… S&P500 -1.7% one week later
11/19/99… S&P500 -0.4% one week later
07/17/98… S&P500 -3.9% one week later
02/27/98… S&P500 +0.6% one week later
05/30/97… S&P500 +1.2% one week later
11/29/96… S&P500 -2.3% one week later
09/15/95… S&P500 -0.3% one week later
02/24/95… S&P500 -0.6% one week later
08/20/93… S&P500 +1.0% one week later
12/11/92… S&P500 +1.7% one week later
01/03/92… S&P500 -1.0% one week later
02/15/91… S&P500 -0.9% one week later
12/01/89… S&P500 -0.6% one week later
08/04/89… S&P500 +0.2% one week later
06/09/89… S&P500 -1.6% one week later
04/28/89… S&P500 -0.7% one week later
02/03/89… S&P500 -1.7% one week later
06/26/87… S&P500 -0.5% one week later
02/06/87… S&P500 -0.1% one week later
10/17/86… S&P500 -0.2% one week later
In 21 out of 30 cases, or 70% of the time, the S&P posted a lower weekly close after five consecutive up weeks, significantly above the 44% at-any-time odds for a lower weekly close one week later. Also note the limited upside potential when the market did manage to keep moving higher, with the S&P rarely gaining much more than 1% on week six.
S&P Trying For a Fifth Consecutive Up Week
By Rennie on Friday, August 14th, 2009 at 12:57 amThe S&P500 closed at a fresh six-month high Thursday, an indication we’re likely to see range-bound trade on Friday. Each of the last thirty instances in which the S&P500 initially closed at a six-month high (meaning it did not close at a six-month high the previous session) are listed in the table below, along with the performance of the S&P the next day. Note the definitive tendency for the market to settle near unchanged levels the next day. Not once out of the last thirty cases did the S&P gain 0.5% or more the next day, and in only three cases did it lose 0.5% or more…
S&P500 Closes at a Six-Month High
08/13/09… S&P ??? next session
08/07/09… S&P -0.3% next session
07/30/09… S&P +0.1% next session
07/23/09… S&P +0.3% next session
07/20/09… S&P +0.4% next session
06/11/09… S&P +0.1% next session
06/01/09… S&P +0.2% next session
10/09/07… S&P -0.2% next session
10/05/07… S&P -0.3% next session
07/19/07… S&P -1.2% next session
07/12/07… S&P +0.3% next session
05/30/07… S&P +0.0% next session
05/18/07… S&P +0.2% next session
05/16/07… S&P -0.1% next session
05/09/07… S&P -1.4% next session
05/02/07… S&P +0.4% next session
04/25/07… S&P -0.1% next session
04/20/07… S&P -0.2% next session
04/16/07… S&P +0.2% next session
02/20/07… S&P -0.1% next session
02/14/07… S&P +0.1% next session
02/07/07… S&P -0.1% next session
02/01/07… S&P +0.2% next session
01/24/07… S&P -1.1% next session
01/12/07… S&P +0.1% next session
12/14/06… S&P +0.1% next session
12/04/06… S&P +0.4% next session
11/21/06… S&P +0.2% next session
11/14/06… S&P +0.2% next session
10/23/06… S&P +0.0% next session
10/12/06… S&P +0.2% next session
While Thursday’s rally in the banks could be interpreted as a bullish reaction to the Fed, it’s interesting that similar action over the past decade has been more of a head-fake than the start of a sustained rally. Out of the 20 instances since 1998 in which the BKX closed up 1% or more immediately following an ‘FOMC Day’, the sector typically struggled over the next week. Two-thirds of the time the BKX was lower five trading days later, and in only two cases did the BKX manage a gain of more than 1.5%. It lost more than 1.5% ten times…
BKX +1% FOllowing FOMC Announcement Day
08/13/09… BKX ??? one week later
06/25/09… BKX -3.2% one week later
05/01/08… BKX -5.6% one week later
01/31/08… BKX -4.5% one week later
08/08/07… BKX -7.9% one week later
05/04/05… BKX -1.4% one week later
03/17/04… BKX -3.2% one week later
06/26/03… BKX -0.1% one week later
03/19/03… BKX -0.4% one week later
09/25/02… BKX +0.5% one week later
08/14/02… BKX +2.3% one week later (*)
06/27/02… BKX +0.4% one week later
05/08/02… BKX +1.5% one week later
01/31/02… BKX -6.5% one week later
06/28/01… BKX -2.1% one week later
05/16/01… BKX +1.4% one week later
03/22/00… BKX +1.7% one week later (*)
10/06/99… BKX -5.7% one week later
05/19/99… BKX -4.2% one week later
12/23/98… BKX -0.7% one week later
05/20/98… BKX -3.2% one week later
New 20-day highs as well as new 52-week highs have been tracing out a pattern of ‘lower highs’ since the beginning of August, suggesting the current rally will need to pause and regroup before the uptrend can continue. Also noteworthy that the S&P is attempting to post its fifth consecutive higher close on the weekly chart. Should the SPX manage to hold above 1010, it would suggest limited upside potential next week. The table below lists each of the last thirty occurrences in which the S&P500 initially posted five consecutive higher closes on its weekly chart…
S&P500 Up Five Consecutive Weeks
04/09/09… S&P500 +1.5% one week later
10/12/07… S&P500 -3.9% one week later
05/04/07… S&P500 +0.0% one week later
10/27/06… S&P500 -1.0% one week later
11/25/05… S&P500 -0.3% one week later
07/29/05… S&P500 -0.6% one week later
09/10/04… S&P500 +0.4% one week later
12/26/03… S&P500 +1.2% one week later
05/16/03… S&P500 -1.2% one week later
08/23/02… S&P500 -2.6% one week later
09/01/00… S&P500 -1.7% one week later
11/19/99… S&P500 -0.4% one week later
07/17/98… S&P500 -3.9% one week later
02/27/98… S&P500 +0.6% one week later
05/30/97… S&P500 +1.2% one week later
11/29/96… S&P500 -2.3% one week later
09/15/95… S&P500 -0.3% one week later
02/24/95… S&P500 -0.6% one week later
08/20/93… S&P500 +1.0% one week later
12/11/92… S&P500 +1.7% one week later
01/03/92… S&P500 -1.0% one week later
02/15/91… S&P500 -0.9% one week later
12/01/89… S&P500 -0.6% one week later
08/04/89… S&P500 +0.2% one week later
06/09/89… S&P500 -1.6% one week later
04/28/89… S&P500 -0.7% one week later
02/03/89… S&P500 -1.7% one week later
06/26/87… S&P500 -0.5% one week later
02/06/87… S&P500 -0.1% one week later
10/17/86… S&P500 -0.2% one week later
In 21 out of 30 cases, or 70% of the time, the S&P posted a lower weekly close after five consecutive up weeks, significantly above the 44% at-any-time odds for a lower weekly close one week later. Also note the limited upside potential when the market did manage to keep moving higher, with the S&P rarely gaining much more than 1% on week six.