Watching for Extremes in New 52-week Highs

The S&P closed up 1.4% Tuesday, more than doubling the 0.6% gain for the Bank Index (BKX). Significant underperformance in the banking sector has generally been a short-term negative sign for stocks. The last thirty times that the S&P gained 1%+ and more than doubled the percentage gain of the BKX are listed below…

SPX +1%, Doubles Performance of BKX
10/06/09… ???
07/20/09… No lower close within two sessions
06/01/09… Lower SPX close two sessions later
04/08/09… No lower close within two sessions
03/26/09… Lower SPX close one session later
03/04/09… Lower SPX close one session later
02/03/09… Lower SPX close one session later
12/10/08… Lower SPX close one session later
11/21/08… No lower close within two sessions
11/07/08… Lower SPX close one session later
10/30/08… No lower close within two sessions
10/23/08… Lower SPX close one session later
10/20/08… Lower SPX close one session later
10/13/08… Lower SPX close one session later
06/13/08… Lower SPX close two sessions later
03/24/08… Lower SPX close two sessions later
02/13/08… Lower SPX close one session later
01/14/08… Lower SPX close one session later
10/31/07… Lower SPX close one session later
08/24/07… Lower SPX close one session later
08/22/07… Lower SPX close one session later
03/06/07… Lower SPX close one session later
05/25/06… Lower SPX close two sessions later
04/21/05… Lower SPX close one session later
11/12/03… Lower SPX close one session later
05/09/03… No lower close within two sessions
04/10/02… Lower SPX close one session later
10/03/01… Lower SPX close one session later
08/24/01… Lower SPX close one session later
07/25/01… No lower close within two sessions
06/05/01… Lower SPX close one session later

Performance has been erratic recently, but overall the signal has maintained an 80% accuracy level, better than the 62% random odds for a lower SPX close within the next two days.

New 52-week highs on the NYSE are back up at mid-September levels, near the key 400 level. Note from this long-term chart of NYSE new highs that 400 has consistently represented an extreme reading over the last four decades. When the number of new highs has exceeded this level, it’s typically been a bullish sign for the intermediate-term. Every instance in which the number of new 52-week highs exceeded 400 for the first time in at least a month are listed in the table below. Note that out of 17 occurrences, 14 led to a higher S&P thirty days later…

New 52-week Highs >400 First Time in a Month
05/31/07… S&P500 +1.4% thirty sessions later
04/16/07… S&P500 +3.4% thirty sessions later
02/01/07… S&P500 -4.1% thirty sessions later
12/04/06… S&P500 +1.5% thirty sessions later
10/26/06… S&P500 +1.5% thirty sessions later
01/27/06… S&P500 +0.0% thirty sessions later
07/11/05… S&P500 +0.2% thirty sessions later
02/04/05… S&P500 -1.6% thirty sessions later
11/04/04… S&P500 +2.8% thirty sessions later
09/02/03… S&P500 +2.7% thirty sessions later
05/27/03… S&P500 +5.3% thirty sessions later
09/16/97… S&P500 -2.5% thirty sessions later
06/12/97… S&P500 +6.3% thirty sessions later
02/18/86… S&P500 +6.0% thirty sessions later
05/20/85… S&P500 +1.2% thirty sessions later
10/07/82… S&P500 +7.4% thirty sessions later
02/20/76… S&P500 +0.2% thirty sessions later

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

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