SPX Joins NDX in New Highs, Institutions Scarce
By
Rennie on Thursday, November 12th, 2009 at 1:32 am
The S&P 2-day RSI closed back over 98 on Wednesday, suggesting limited upside potential over the short-term (see Monday’s column). The 2-day RSI barely closed under 98 on Tuesday’s fractional drop, and for the Nasdaq we still haven’t seen a drop under 98. Wednesday marked the third consecutive overbought reading from the NDX 2-day RSI, which is only the second time in the last two years this has occurred. Since 1995, there have been twenty separate instances of the NDX 2-day RSI holding above 98 for three consecutive sessions. In every case but one, the NDX proceeded to close at a subsequently higher level 3-5 trading days later. Anticipating further upside after a period of unusual strength has been a winning strategy in recent years.
The S&P also closed at a fresh six-month high Wednesday, which has usually translated into range-bound trading the next session. 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 that the S&P managed a gain of 0.5%+ only one time…
S&P500 Closes at a Six-Month High
11/11/09… S&P ??? next session
10/19/09… S&P -0.6% next session
10/14/09… S&P +0.4% next session
10/12/09… S&P -0.3% next session
09/22/09… S&P -1.0% next session
09/14/09… S&P +0.3% next session
09/09/09… S&P +1.0% next session (*)
08/25/09… S&P +0.0% next session
08/21/09… S&P -0.1% next session
08/13/09… S&P -0.9% 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
TICKscore closed at a weak -9 Wednesday, reflecting a persistent absence of institutional buyers. Recall that TICKscore measures the amount of time that the NYSE TICK spends in extreme positive or negative territory. While prices can continue higher over the intermediate-term without institutional support, it’s doubtful such a move could be sustained for the longer-term. Note from the long-term chart that there’s essentially never been a sustained upside breakout without a corresponding breakout by the cumulative TICKscore. The market has bounced back from a wave of institutional selling in late October with surprising force, which should be respected for the time being. But barring a big shift in NYSE TICK distribution over the coming weeks, I would expect a choppy move up over the next few weeks to be followed by a selloff in December.
SPX Joins NDX in New Highs, Institutions Scarce
By Rennie on Thursday, November 12th, 2009 at 1:32 amThe S&P 2-day RSI closed back over 98 on Wednesday, suggesting limited upside potential over the short-term (see Monday’s column). The 2-day RSI barely closed under 98 on Tuesday’s fractional drop, and for the Nasdaq we still haven’t seen a drop under 98. Wednesday marked the third consecutive overbought reading from the NDX 2-day RSI, which is only the second time in the last two years this has occurred. Since 1995, there have been twenty separate instances of the NDX 2-day RSI holding above 98 for three consecutive sessions. In every case but one, the NDX proceeded to close at a subsequently higher level 3-5 trading days later. Anticipating further upside after a period of unusual strength has been a winning strategy in recent years.
The S&P also closed at a fresh six-month high Wednesday, which has usually translated into range-bound trading the next session. 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 that the S&P managed a gain of 0.5%+ only one time…
S&P500 Closes at a Six-Month High
11/11/09… S&P ??? next session
10/19/09… S&P -0.6% next session
10/14/09… S&P +0.4% next session
10/12/09… S&P -0.3% next session
09/22/09… S&P -1.0% next session
09/14/09… S&P +0.3% next session
09/09/09… S&P +1.0% next session (*)
08/25/09… S&P +0.0% next session
08/21/09… S&P -0.1% next session
08/13/09… S&P -0.9% 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
TICKscore closed at a weak -9 Wednesday, reflecting a persistent absence of institutional buyers. Recall that TICKscore measures the amount of time that the NYSE TICK spends in extreme positive or negative territory. While prices can continue higher over the intermediate-term without institutional support, it’s doubtful such a move could be sustained for the longer-term. Note from the long-term chart that there’s essentially never been a sustained upside breakout without a corresponding breakout by the cumulative TICKscore. The market has bounced back from a wave of institutional selling in late October with surprising force, which should be respected for the time being. But barring a big shift in NYSE TICK distribution over the coming weeks, I would expect a choppy move up over the next few weeks to be followed by a selloff in December.