A Rare Price Pattern Developing on the Monthly S&P500 Chart
By
Rennie on Thursday, May 13th, 2010 at 3:21 am
In a highly unusual divergence, NYSE TICK action and breadth trended in opposite directions Wednesday. Cumulative TICK entered into a downtrend shortly after 11am ET and continued to trend lower throughout the day, closing at -22,000. TICKscore also held in negative territory the entire session, closing at -11. Those are extremely weak readings considering NYSE breadth, which started in 2:1 positive territory and continued to improve throughout the day, closing nearly 6:1 positive. What it means isn’t entirely clear, although the two other times we’ve seen a negative Cumulative TICK coincide with 2:1+ positive breadth (11/13/08, 9/18/08), the market came under significant selling pressure over the intermediate-term.
Pull up a monthly chart of the S&P500 and you’ll see another rare occurrence… an extra-long tail and a nearly flat close. The month’s not over, of course, and that’s what makes the current chart pattern interesting. History suggests that when the month draws to a close, the ‘tail’ on the monthly bar won’t be quite as long because the close won’t be quite as high. Here’s a look at every instance since 1962 in which the S&P500 fell 10%+ during the month along with the S&P’s percentage change at month-end…
S&P500 Falls Over 10% During the Month
05/12/10… S&P -10.2% intramonth, currently -1.3%
02/27/09… S&P -11.1% intramonth, closes -11.0%
01/30/09… S&P -11.0% intramonth, closes -8.6%
11/28/08… S&P -23.5% intramonth, closes -7.5%
10/31/08… S&P -28.0% intramonth, closes -16.9%
09/30/08… S&P -13.8% intramonth, closes -9.1%
01/31/08… S&P -13.5% intramonth, closes -6.1%
09/30/02… S&P -12.6% intramonth, closes -11.0%
07/31/02… S&P -21.6% intramonth, closes -7.9%
06/28/02… S&P -10.7% intramonth, closes -7.2%
09/28/01… S&P -16.7% intramonth, closes -8.2%
03/30/01… S&P -12.8% intramonth, closes -6.4%
02/28/01… S&P -11.0% intramonth, closes -9.2%
04/28/00… S&P -10.6% intramonth, closes -3.1%
08/31/98… S&P -14.6% intramonth, closes -14.6%
08/31/90… S&P -14.0% intramonth, closes -9.4%
11/30/87… S&P -10.3% intramonth, closes -8.5%
10/30/87… S&P -32.7% intramonth, closes -21.8%
09/30/81… S&P -10.3% intramonth, closes -5.4%
12/31/80… S&P -10.8% intramonth, closes -3.4%
03/31/80… S&P -17.1% intramonth, closes -10.2%
10/31/78… S&P -10.6% intramonth, closes -9.2%
09/30/74… S&P -13.3% intramonth, closes -11.9%
08/30/74… S&P -12.5% intramonth, closes -9.0%
11/30/73… S&P -12.4% intramonth, closes -11.4%
05/29/70… S&P -15.8% intramonth, closes -6.1%
04/30/70… S&P -11.5% intramonth, closes -9.1%
08/31/66… S&P -11.6% intramonth, closes -7.8%
06/29/62… S&P -13.9% intramonth, closes -8.2%
05/31/62… S&P -18.6% intramonth, closes -8.6%
As far as the last 48 years are concerned, It would be unprecedented to see the S&P finish out the current month in positive territory. In fact it would be unprecedented to even see the S&P finish out the month at current levels (-1.3%). The best that the S&P managed was a -3.1% performance in April 2000.
To look back further in time, we need to switch indices. While we have S&P data going back to the 1930’s, it’s on a close-only basis prior to 1962, and high-low-close data is necessary to generate accurate monthly bars. So we turn to the Dow Industrials, where our H-L-C database extends back to 1929. There have been a total of 65 months in which the Dow traded down 10% or more from the previous month’s close. Each occurrence is shown below along with the Dow’s percentage change at the end of the month. ..
Dow Industrials Avg Falls Over 10% During the Month
05/12/10… Dow -10.3% intramonth, currently -1.0%
02/27/09… Dow -12.1% intramonth, closes -11.7%
11/28/08… Dow -20.1% intramonth, closes -5.3%
10/31/08… Dow -27.4% intramonth, closes -14.1%
09/30/08… Dow -10.2% intramonth, closes -6.0%
06/30/08… Dow -10.7% intramonth, closes -10.2%
01/31/08… Dow -12.3% intramonth, closes -4.6%
09/30/02… Dow -14.3% intramonth, closes -12.4%
07/31/02… Dow -19.0% intramonth, closes -5.5%
06/28/02… Dow -11.0% intramonth, closes -6.9%
09/28/01… Dow -20.3% intramonth, closes -11.1%
03/30/01… Dow -13.8% intramonth, closes -5.9%
10/31/00… Dow -10.1% intramonth, closes +3.0% (*)
02/29/00… Dow -10.8% intramonth, closes -7.4%
08/31/98… Dow -15.4% intramonth, closes -15.1%
10/31/97… Dow -12.7% intramonth, closes -6.3%
08/31/90… Dow -15.4% intramonth, closes -10.0%
10/30/87… Dow -37.8% intramonth, closes -23.2%
03/31/80… Dow -15.4% intramonth, closes -9.0%
09/30/74… Dow -11.8% intramonth, closes -10.4%
08/30/74… Dow -14.0% intramonth, closes -10.4%
11/30/73… Dow -15.3% intramonth, closes -14.0%
05/29/70… Dow -14.8% intramonth, closes -4.8%
08/31/66… Dow -10.4% intramonth, closes -7.0%
06/29/62… Dow -14.5% intramonth, closes -8.5%
05/31/62… Dow -16.8% intramonth, closes -7.8%
05/31/56… Dow -10.1% intramonth, closes -7.4%
09/30/46… Dow -13.3% intramonth, closes -8.9%
02/28/46… Dow -10.1% intramonth, closes -7.1%
05/31/40… Dow -25.6% intramonth, closes -21.7%
08/31/39… Dow -10.2% intramonth, closes -6.2%
03/31/39… Dow -10.8% intramonth, closes -10.5%
01/31/39… Dow -12.1% intramonth, closes -7.1%
03/31/38… Dow -24.8% intramonth, closes -23.7%
11/30/37… Dow -18.9% intramonth, closes -10.6%
10/30/37… Dow -25.1% intramonth, closes -10.6%
09/30/37… Dow -17.6% intramonth, closes -12.9%
07/31/34… Dow -11.6% intramonth, closes -8.0%
05/31/34… Dow -11.3% intramonth, closes -6.5%
10/31/33… Dow -13.3% intramonth, closes -7.0%
09/30/33… Dow -10.2% intramonth, closes -7.4%
07/31/33… Dow -13.9% intramonth, closes -7.5%
02/28/33… Dow -18.4% intramonth, closes -15.6%
10/31/32… Dow -19.4% intramonth, closes -13.5%
09/30/32… Dow -12.2% intramonth, closes -2.2%
05/31/32… Dow -21.1% intramonth, closes -20.3%
04/30/32… Dow -24.6% intramonth, closes -23.4%
03/31/32… Dow -11.0% intramonth, closes -10.0%
01/30/32… Dow -10.3% intramonth, closes -2.2%
12/31/31… Dow -23.5% intramonth, closes -17.0%
11/30/31… Dow -15.3% intramonth, closes -11.0%
10/31/31… Dow -11.5% intramonth, closes +9.1% (*)
09/30/31… Dow -31.3% intramonth, closes -30.7%
07/31/31… Dow -11.0% intramonth, closes -9.9%
05/29/31… Dow -15.8% intramonth, closes -15.0%
04/30/31… Dow -17.7% intramonth, closes -12.3%
03/31/31… Dow -10.0% intramonth, closes -9.1%
12/31/30… Dow -15.8% intramonth, closes -10.3%
10/31/30… Dow -11.4% intramonth, closes -10.5%
09/30/30… Dow -16.0% intramonth, closes -14.8%
06/30/30… Dow -24.5% intramonth, closes -17.7%
05/29/30… Dow -10.5% intramonth, closes -1.5%
11/27/29… Dow -28.6% intramonth, closes -12.6%
10/31/29… Dow -38.2% intramonth, closes -20.4%
09/30/29… Dow -10.3% intramonth, closes -9.7%
03/28/29… Dow -11.3% intramonth, closes -2.7%
Once again we find that after taking such a big hit, the market hardly ever claws its way back into positive territory on the same bar. Out of a total of 65 months with a 10%+ intramonth loss, 63 (97%) led to a lower monthly close. Even during the volatile ’29-’34 period, when nearly half (29) of the down 10%+ months occurred, only once did the Dow manage to climb into positive territory at month-end. That’s a significant point given that there’s still two and a half weeks to go in the month of May and the market is currently off only 1%. Dow 11,000 could be formidable resistance.
A Rare Price Pattern Developing on the Monthly S&P500 Chart
By Rennie on Thursday, May 13th, 2010 at 3:21 amIn a highly unusual divergence, NYSE TICK action and breadth trended in opposite directions Wednesday. Cumulative TICK entered into a downtrend shortly after 11am ET and continued to trend lower throughout the day, closing at -22,000. TICKscore also held in negative territory the entire session, closing at -11. Those are extremely weak readings considering NYSE breadth, which started in 2:1 positive territory and continued to improve throughout the day, closing nearly 6:1 positive. What it means isn’t entirely clear, although the two other times we’ve seen a negative Cumulative TICK coincide with 2:1+ positive breadth (11/13/08, 9/18/08), the market came under significant selling pressure over the intermediate-term.
Pull up a monthly chart of the S&P500 and you’ll see another rare occurrence… an extra-long tail and a nearly flat close. The month’s not over, of course, and that’s what makes the current chart pattern interesting. History suggests that when the month draws to a close, the ‘tail’ on the monthly bar won’t be quite as long because the close won’t be quite as high. Here’s a look at every instance since 1962 in which the S&P500 fell 10%+ during the month along with the S&P’s percentage change at month-end…
S&P500 Falls Over 10% During the Month
05/12/10… S&P -10.2% intramonth, currently -1.3%
02/27/09… S&P -11.1% intramonth, closes -11.0%
01/30/09… S&P -11.0% intramonth, closes -8.6%
11/28/08… S&P -23.5% intramonth, closes -7.5%
10/31/08… S&P -28.0% intramonth, closes -16.9%
09/30/08… S&P -13.8% intramonth, closes -9.1%
01/31/08… S&P -13.5% intramonth, closes -6.1%
09/30/02… S&P -12.6% intramonth, closes -11.0%
07/31/02… S&P -21.6% intramonth, closes -7.9%
06/28/02… S&P -10.7% intramonth, closes -7.2%
09/28/01… S&P -16.7% intramonth, closes -8.2%
03/30/01… S&P -12.8% intramonth, closes -6.4%
02/28/01… S&P -11.0% intramonth, closes -9.2%
04/28/00… S&P -10.6% intramonth, closes -3.1%
08/31/98… S&P -14.6% intramonth, closes -14.6%
08/31/90… S&P -14.0% intramonth, closes -9.4%
11/30/87… S&P -10.3% intramonth, closes -8.5%
10/30/87… S&P -32.7% intramonth, closes -21.8%
09/30/81… S&P -10.3% intramonth, closes -5.4%
12/31/80… S&P -10.8% intramonth, closes -3.4%
03/31/80… S&P -17.1% intramonth, closes -10.2%
10/31/78… S&P -10.6% intramonth, closes -9.2%
09/30/74… S&P -13.3% intramonth, closes -11.9%
08/30/74… S&P -12.5% intramonth, closes -9.0%
11/30/73… S&P -12.4% intramonth, closes -11.4%
05/29/70… S&P -15.8% intramonth, closes -6.1%
04/30/70… S&P -11.5% intramonth, closes -9.1%
08/31/66… S&P -11.6% intramonth, closes -7.8%
06/29/62… S&P -13.9% intramonth, closes -8.2%
05/31/62… S&P -18.6% intramonth, closes -8.6%
As far as the last 48 years are concerned, It would be unprecedented to see the S&P finish out the current month in positive territory. In fact it would be unprecedented to even see the S&P finish out the month at current levels (-1.3%). The best that the S&P managed was a -3.1% performance in April 2000.
To look back further in time, we need to switch indices. While we have S&P data going back to the 1930’s, it’s on a close-only basis prior to 1962, and high-low-close data is necessary to generate accurate monthly bars. So we turn to the Dow Industrials, where our H-L-C database extends back to 1929. There have been a total of 65 months in which the Dow traded down 10% or more from the previous month’s close. Each occurrence is shown below along with the Dow’s percentage change at the end of the month. ..
Dow Industrials Avg Falls Over 10% During the Month
05/12/10… Dow -10.3% intramonth, currently -1.0%
02/27/09… Dow -12.1% intramonth, closes -11.7%
11/28/08… Dow -20.1% intramonth, closes -5.3%
10/31/08… Dow -27.4% intramonth, closes -14.1%
09/30/08… Dow -10.2% intramonth, closes -6.0%
06/30/08… Dow -10.7% intramonth, closes -10.2%
01/31/08… Dow -12.3% intramonth, closes -4.6%
09/30/02… Dow -14.3% intramonth, closes -12.4%
07/31/02… Dow -19.0% intramonth, closes -5.5%
06/28/02… Dow -11.0% intramonth, closes -6.9%
09/28/01… Dow -20.3% intramonth, closes -11.1%
03/30/01… Dow -13.8% intramonth, closes -5.9%
10/31/00… Dow -10.1% intramonth, closes +3.0% (*)
02/29/00… Dow -10.8% intramonth, closes -7.4%
08/31/98… Dow -15.4% intramonth, closes -15.1%
10/31/97… Dow -12.7% intramonth, closes -6.3%
08/31/90… Dow -15.4% intramonth, closes -10.0%
10/30/87… Dow -37.8% intramonth, closes -23.2%
03/31/80… Dow -15.4% intramonth, closes -9.0%
09/30/74… Dow -11.8% intramonth, closes -10.4%
08/30/74… Dow -14.0% intramonth, closes -10.4%
11/30/73… Dow -15.3% intramonth, closes -14.0%
05/29/70… Dow -14.8% intramonth, closes -4.8%
08/31/66… Dow -10.4% intramonth, closes -7.0%
06/29/62… Dow -14.5% intramonth, closes -8.5%
05/31/62… Dow -16.8% intramonth, closes -7.8%
05/31/56… Dow -10.1% intramonth, closes -7.4%
09/30/46… Dow -13.3% intramonth, closes -8.9%
02/28/46… Dow -10.1% intramonth, closes -7.1%
05/31/40… Dow -25.6% intramonth, closes -21.7%
08/31/39… Dow -10.2% intramonth, closes -6.2%
03/31/39… Dow -10.8% intramonth, closes -10.5%
01/31/39… Dow -12.1% intramonth, closes -7.1%
03/31/38… Dow -24.8% intramonth, closes -23.7%
11/30/37… Dow -18.9% intramonth, closes -10.6%
10/30/37… Dow -25.1% intramonth, closes -10.6%
09/30/37… Dow -17.6% intramonth, closes -12.9%
07/31/34… Dow -11.6% intramonth, closes -8.0%
05/31/34… Dow -11.3% intramonth, closes -6.5%
10/31/33… Dow -13.3% intramonth, closes -7.0%
09/30/33… Dow -10.2% intramonth, closes -7.4%
07/31/33… Dow -13.9% intramonth, closes -7.5%
02/28/33… Dow -18.4% intramonth, closes -15.6%
10/31/32… Dow -19.4% intramonth, closes -13.5%
09/30/32… Dow -12.2% intramonth, closes -2.2%
05/31/32… Dow -21.1% intramonth, closes -20.3%
04/30/32… Dow -24.6% intramonth, closes -23.4%
03/31/32… Dow -11.0% intramonth, closes -10.0%
01/30/32… Dow -10.3% intramonth, closes -2.2%
12/31/31… Dow -23.5% intramonth, closes -17.0%
11/30/31… Dow -15.3% intramonth, closes -11.0%
10/31/31… Dow -11.5% intramonth, closes +9.1% (*)
09/30/31… Dow -31.3% intramonth, closes -30.7%
07/31/31… Dow -11.0% intramonth, closes -9.9%
05/29/31… Dow -15.8% intramonth, closes -15.0%
04/30/31… Dow -17.7% intramonth, closes -12.3%
03/31/31… Dow -10.0% intramonth, closes -9.1%
12/31/30… Dow -15.8% intramonth, closes -10.3%
10/31/30… Dow -11.4% intramonth, closes -10.5%
09/30/30… Dow -16.0% intramonth, closes -14.8%
06/30/30… Dow -24.5% intramonth, closes -17.7%
05/29/30… Dow -10.5% intramonth, closes -1.5%
11/27/29… Dow -28.6% intramonth, closes -12.6%
10/31/29… Dow -38.2% intramonth, closes -20.4%
09/30/29… Dow -10.3% intramonth, closes -9.7%
03/28/29… Dow -11.3% intramonth, closes -2.7%
Once again we find that after taking such a big hit, the market hardly ever claws its way back into positive territory on the same bar. Out of a total of 65 months with a 10%+ intramonth loss, 63 (97%) led to a lower monthly close. Even during the volatile ’29-’34 period, when nearly half (29) of the down 10%+ months occurred, only once did the Dow manage to climb into positive territory at month-end. That’s a significant point given that there’s still two and a half weeks to go in the month of May and the market is currently off only 1%. Dow 11,000 could be formidable resistance.