Semiconductors Underperforming, Overbought Conditions Persist

With the Nasdaq100 (NDX) currently up 1.4%, it’s noteworthy that the semiconductor sector is underperforming, currently up only 0.2%. Historically, it’s not a short-term positive sign when the SOX underperforms by such a wide margin.  The table below lists each of the last thirty instances in which the NDX closed up 1% or more and the SOX settled with a gain of less than 0.5% (or closed lower)…

NDX Gains 1%+, SOX Gains Less Than 0.5% or Settles Lower
08/07/09… Lower NDX close one session later
04/21/09… No lower close within three sessions
02/03/09… Lower NDX close one session later
01/08/09… Lower NDX close one session later
07/01/08… Lower NDX close one session later
01/31/08… Lower NDX close two sessions later
01/09/08… Lower NDX close two sessions later
12/21/07… Lower NDX close three sessions later
11/16/07… Lower NDX close one session later
10/26/07… No lower close within three sessions
10/23/07… Lower NDX close one session later
08/02/07… Lower NDX close one session later
05/16/07… Lower NDX close one session later
03/14/07… Lower NDX close two sessions later
01/11/07… Lower NDX close three sessions later
09/20/06… Lower NDX close one session later
05/25/06… Lower NDX close two sessions later
10/19/05… Lower NDX close one session later
11/22/04… Lower NDX close one session later
04/22/04… Lower NDX close two sessions later
09/02/03… Lower NDX close one session later
06/11/03… Lower NDX close two sessions later
02/21/03… Lower NDX close one session later
12/06/02… Lower NDX close one session later
10/14/02… No lower close within three sessions
09/09/02… Lower NDX close three sessions later
08/29/02… Lower NDX close one session later
08/22/02… Lower NDX close one session later
07/26/02… No lower close within three sessions
07/17/02… Lower NDX close one session later
06/05/02… Lower NDX close one session later

Note that in 26 out of 30 cases, or 87% of the time, the NDX posted a subsequently lower close (below the setup day) within the next three sessions (and usually within the next two). That’s significantly above the 68% at-any-time odds for a lower NDX close within three days.

I’d also note that the NYSE McClellan Oscillator is holding in overbought territory (>+150) for a second consecutive session. This is also set to trigger a sell signal that will remain in effect until the McClellan falls back to more average territory. The table below lists the last thirty instances in which the McClellan closed over +150 two consecutive sessions, along with the S&P’s performance by the time the McClellan fell back under +100. Note that in 25 cases, or 83% of the time, the S&P was at a lower level when the McClellan fell back under +100. This setup has struggled recently, with only 50% of signals in 2009 leading to a lower market…

McClellan Over +150 Two Days Running
07/31/09… S&P500 +1.5% when McClellan <100
07/16/09… S&P500 +3.7% when McClellan <100
04/16/09… S&P500 -3.8%  when McClellan <100
04/13/09… S&P500 -3.1%  when McClellan <100
04/02/09…  S&P500 -2.3% when McClellan <100
03/16/09… S&P500 +4.5% when McClellan <100
12/31/08…  S&P500 -3.7% when McClellan <100
12/17/08…  S&P500 -4.6% when McClellan <100
12/03/08…  S&P500 -0.2% when McClellan <100
11/28/08…  S&P500 -8.9% when McClellan <100
10/31/08…  S&P500 -6.6% when McClellan <100
08/06/08…  S&P500 -1.8% when McClellan <100
07/23/08…  S&P500 -2.3% when McClellan <100
04/02/08…  S&P500 -1.0% when McClellan <100
02/01/08…  S&P500 -4.2% when McClellan <100
12/07/07…  S&P500 -1.8% when McClellan <100
10/02/07…  S&P500 -0.5% when McClellan <100
09/19/07…  S&P500 -0.7% when McClellan <100
09/04/07…  S&P500 -2.4% when McClellan <100
03/22/07…  S&P500 -0.4% when McClellan <100
08/17/06…  S&P500 +0.0% when McClellan <100
07/03/06…  S&P500 -1.7% when McClellan <100
01/09/06…  S&P500 -0.3% when McClellan <100
11/25/05…  S&P500 -0.9% when McClellan <100
06/02/05…  S&P500 -0.8% when McClellan <100
05/19/05…  S&P500 -0.1% when McClellan <100
05/25/04…  S&P500 +1.6% when McClellan <100
09/03/03…  S&P500 -0.3% when McClellan <100
04/23/03…  S&P500 -2.2% when McClellan <100
11/04/02…  S&P500 -1.5% when McClellan <100

Categories : Archived Intraday Commentary, Intraday Commentary

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