Financials Lead Recovery? Uh Oh

Here’s an interesting pattern that has emerged in recent years, one that’s currently set to trigger at today’s close… when the Bank Index (BKX) has posted a strong up day and outperformed the S&P by a wide margin, it’s been followed by short-term weakness in recent years. The table below lists the last thirty sessions in which the BKX closed up 2% or more, the SPX closed up 0.5% or more and the BKX tripled the S&P gain. Note that in 26  occurrences, or 87% of the time, the S&P posted a subsequently lower close (below the setup day’s close) within the next three days, significantly above the 62% random chance for a lower S&P close within three days in the same time period…

BKX +2.0%, SPX +0.5%, BKX Triples SPX Gain
05/21/10… ???
04/20/10… Lower S&P close one session later
04/14/10… Lower S&P close two sessions later
12/18/09… No lower close within three days
12/04/09… Lower S&P close one session later
10/22/09… Lower S&P close one session later
09/22/09… Lower S&P close one session later
08/13/09… Lower S&P close one session later
06/18/09… Lower S&P close two sessions later
06/11/09… Lower S&P close two sessions later
06/04/09… Lower S&P close one session later
05/14/09… Lower S&P close one session later
05/08/09… Lower S&P close one session later
05/06/09… Lower S&P close one session later
05/04/09… Lower S&P close one session later
04/23/09… No lower close within three days
04/21/09… Lower S&P close one session later
04/15/09… Lower S&P close three sessions later
04/09/09… Lower S&P close two sessions later
04/03/09… Lower S&P close one session later
03/31/09… No lower close within three days
03/25/09… Lower S&P close three sessions later
03/18/09… Lower S&P close one session later
02/24/09… Lower S&P close one session later
02/11/09… Lower S&P close two sessions later
02/06/09… Lower S&P close two sessions later
01/28/09… Lower S&P close one session later
01/23/09… No lower close within three days
01/21/09… Lower S&P close one session later
11/28/08… Lower S&P close one session later
11/25/08… Lower S&P close three sessions later

Categories : Archived Intraday Commentary, Intraday Commentary

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