Low Volume Bounce

Stocks rebounded out of technically oversold territory Thursday, sending the 2-day RSI for the S&P500 back up to a neutral 50 and closing out the short-term buy setup discussed yesterday. The negative wide-range signal from Tuesday remains on the board, and it’s joined by another short-term negative setup given today’s bounce on light volume. SPY volume hit its lowest level in over three weeks, a sign institutions were not actively participating in Thursday’s bounce. That’s a short-term negative sign given that the low volume coincided with a 2:1 positive breadth session. The table below lists the last thirty instances in which SPY volume hit a three-week or better low on a day in which NYSE advancers topped decliners by more than a 2:1 margin. Note that in 25 out of the last 30 occurrences, or 83% of the time, the SPY posted a subsequently lower close within the next two days. That’s significantly greater than the 59% at-any-time odds for a lower SPY close within two days in the same time frame.

NYSE Breadth 2:1 Positive, SPY Volume at Three-week Low
09/03/09… ???
04/08/09… No lower SPY close within two days
04/03/09… Lower SPY close one session later
11/28/08… Lower SPY close one session later
10/20/08… Lower SPY close one session later
08/22/08… Lower SPY close one session later
01/29/08… Lower SPY close one session later
12/24/07… Lower SPY close two sessions later
11/23/07… Lower SPY close one session later
09/27/07… Lower SPY close one session later
08/24/07… Lower SPY close one session later
12/26/06… No lower SPY close within two days
07/03/06… Lower SPY close one session later
05/27/05… Lower SPY close one session later
05/26/05… Lower SPY close two sessions later
05/09/05… Lower SPY close one session later
12/28/04… Lower SPY close two sessions later
11/24/04… Lower SPY close one session later
09/16/04… Lower SPY close two sessions later
08/27/04… Lower SPY close one session later
05/18/04… Lower SPY close one session later
02/17/04… Lower SPY close one session later
11/14/02… Lower SPY close two sessions later
11/23/01… Lower SPY close two sessions later
11/13/01… No lower SPY close within two days
03/30/01… Lower SPY close one session later
11/24/00… Lower SPY close two sessions later
07/03/00… Lower SPY close one session later
07/01/98… No lower SPY close within two days
05/23/97… No lower SPY close within two days
08/16/96… Lower SPY close two sessions later

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

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