Persistence Pays

The S&P500 has closed higher in nine out of the past ten sessions, a bullish sign from an intermediate-term perspective. This type of persistent move means buyers have been in an unusually dominant position, and history reveals a definitive tendency for the uptrend to continue over the next 10-20 trading days. Each of the last 30 separate instances in which the S&P initially posted nine higher closes in the past ten sessions is noted in the table below, along with the S&P’s performance both ten and twenty trading days later…

S&P500 Up Nine out of Past Ten Trading Days
04/15/10… S&P ???
03/11/10… S&P +1.4% in ten days, +3.8% in twenty days
04/16/07… S&P +1.0% in ten days, +2.4% in twenty days
11/17/06… S&P +0.6% in ten days, +1.5% in twenty days
10/31/06… S&P +1.1% in ten days, +1.6% in twenty days
10/25/06… S&P +0.3% in ten days, +1.7% in twenty days
07/20/05… S&P +0.8% in ten days, -1.2% in twenty days
07/15/05… S&P +0.5% in ten days, +0.2% in twenty days
11/05/04… S&P +0.4% in ten days, +2.1% in twenty days
09/08/03… S&P -0.9% in ten days, +0.3% in twenty days
09/04/03… S&P +1.1% in ten days, -0.8% in twenty days
08/19/03… S&P +2.4% in ten days, +2.4% in twenty days
06/04/03… S&P +2.4% in ten days, +0.8% in twenty days
03/25/03… S&P +0.4% in ten days, +5.1% in twenty days
11/27/98… S&P -2.2% in ten days, +2.8% in twenty days
10/22/98… S&P +5.1% in ten days, +6.9% in twenty days
06/17/97… S&P -0.4% in ten days, +4.7% in twenty days
01/22/97… S&P -1.0% in ten days, +2.1% in twenty days
11/15/96… S&P +2.6% in ten days, -2.3% in twenty days
09/16/96… S&P +0.5% in ten days, +2.9% in twenty days
05/01/96… S&P +1.7% in ten days, +2.6% in twenty days
02/08/96… S&P +0.5% in ten days, -3.4% in twenty days
09/07/95… S&P +2.2% in ten days, +2.2% in twenty days
02/24/95… S&P +0.3% in ten days, +2.6% in twenty days
10/21/92… S&P +0.4% in ten days, +1.7% in twenty days
01/02/92… S&P +0.2% in ten days, -1.4% in twenty days
05/08/90… S&P +4.8% in ten days, +6.7% in twenty days
10/05/89… S&P -2.8% in ten days, -5.2% in twenty days (*)
07/14/89… S&P +3.1% in ten days, +3.9% in twenty days
06/16/87… S&P -0.3% in ten days, +1.9% in twenty days
01/15/87… S&P +3.3% in ten days, +3.8% in twenty days

Note that both the ten and twenty-day outlooks have a respectable 76% accuracy level at calling for a higher S&P. Even more interesting is the fact that on those occasions when the S&P was lower ten sessions later, it rebounded into positive territory by the twenty-day mark in every case but one. Similarly, on those occasions when the S&P was lower twenty sessions later, it had already posted a gain after the first ten sessions in every case. Put another way, in 29 out of the past 30 occurrences since 1987, the S&P closed at a higher level  ten OR twenty trading days later. That 97% win rate is significantly greater than the 72% random chance for a higher S&P close ten or twenty days later in the same time frame. When the S&P puts together a long string of nine higher closes within a ten-day time span, it’s a bullish sign for the intermediate-term as strength begets strength.

S&P futures not only posted a higher high and low vs. Wednesday but closed higher as well, a pattern that has a solid track record at calling for a higher S&P close two sessions later (see this March 2nd column for details). We also have an overbought 1-2 day buy setup for the NDX based on the persistently overbought 5-day RSI.  Given the large number of bullish setups currently on the board, it looks like the uptrend has further to run on both a short-term and intermediate-term perspective.

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

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