Last Hour Indicator Surges as Bearish Retracement Underway
By
Rennie on Tuesday, May 25th, 2010 at 1:27 pm
Yesterday’s Nasdaq outperformance told us to be on watch for signs of a bottom during today’s session. So far we’re not seeing much, although institutional selling pressure as reflected by today’s -11 TICKscore is fairly muted. You may recall a few sessions back when S&P futures posted a similarly large gap down, TICKscore closed at -76, so we’re seeing an improvement in that regard (less selling pressure at a lower price point). One concern, however, is that S&P futures are currently trading above the day’s midpoint of 1048.75 despite massively lopsided negative breadth. When the S&Ps close above the midpoint on a day when most stocks are trending lower, it signals a weak recovery that usually doesn’t stick. Here’s a look at each of the last thirty instances in which S&P futures closed above the day’s midpoint despite 2:1+ negative breadth…
S&P Futures Close >Midpoint Despite 2:1 Negative Breadth
05/06/10… Lower S&P close one session later
01/20/10… Lower S&P close one session later
01/12/10… No lower close within next two sessions
11/27/09… No lower close within next two sessions
11/19/09… Lower S&P close one session later
08/31/09… Lower S&P close one session later
08/14/09… Lower S&P close one session later
06/03/09… No lower close within next two sessions
05/21/09… Lower S&P close one session later
04/06/09… Lower S&P close one session later
03/27/09… Lower S&P close one session later
02/20/09… Lower S&P close one session later
01/22/09… Lower S&P close one session later
12/22/08… Lower S&P close one session later
12/15/08… No lower close within next two sessions
10/22/08… Lower S&P close two sessions later
10/06/08… Lower S&P close one session later
09/26/08… Lower S&P close one session later
04/22/08… Lower S&P close one session later
03/17/08… No lower close within next two sessions
03/04/08… Lower S&P close two sessions later
11/05/07… Lower S&P close two sessions later
09/07/07… Lower S&P close one session later
09/05/07… Lower S&P close two sessions later
06/05/07… Lower S&P close one session later
03/27/07… Lower S&P close one session later
07/05/06… Lower S&P close two sessions later
03/07/06… Lower S&P close two sessions later
10/06/05… Lower S&P close two sessions later
09/19/05… Lower S&P close one session later
In 25 out of the last 30 occurrences, or 83% of the time, S&P futures posted a subsequently lower close one or two trading days later, significantly above the 58% random odds for a lower S&P close 1-2 days later in the same time frame. If S&P futures settle back under the day’s midpoint, I’d still be on watch for a short-term bottom given yesterday’s NDX outperformance and the reduced institutional selling during today’s session.
From a longer-term perspective, note that today’s sharply lower open has sent the Last Hour indicator up over 200 points. This reinforces the notion that the long-term retracement phase is underway, a bearish sign until the retracement is complete (which requires the Last Hour to rise another 1,000 points or so from current levels).
Last Hour Indicator Surges as Bearish Retracement Underway
By Rennie on Tuesday, May 25th, 2010 at 1:27 pmYesterday’s Nasdaq outperformance told us to be on watch for signs of a bottom during today’s session. So far we’re not seeing much, although institutional selling pressure as reflected by today’s -11 TICKscore is fairly muted. You may recall a few sessions back when S&P futures posted a similarly large gap down, TICKscore closed at -76, so we’re seeing an improvement in that regard (less selling pressure at a lower price point). One concern, however, is that S&P futures are currently trading above the day’s midpoint of 1048.75 despite massively lopsided negative breadth. When the S&Ps close above the midpoint on a day when most stocks are trending lower, it signals a weak recovery that usually doesn’t stick. Here’s a look at each of the last thirty instances in which S&P futures closed above the day’s midpoint despite 2:1+ negative breadth…
S&P Futures Close >Midpoint Despite 2:1 Negative Breadth
05/06/10… Lower S&P close one session later
01/20/10… Lower S&P close one session later
01/12/10… No lower close within next two sessions
11/27/09… No lower close within next two sessions
11/19/09… Lower S&P close one session later
08/31/09… Lower S&P close one session later
08/14/09… Lower S&P close one session later
06/03/09… No lower close within next two sessions
05/21/09… Lower S&P close one session later
04/06/09… Lower S&P close one session later
03/27/09… Lower S&P close one session later
02/20/09… Lower S&P close one session later
01/22/09… Lower S&P close one session later
12/22/08… Lower S&P close one session later
12/15/08… No lower close within next two sessions
10/22/08… Lower S&P close two sessions later
10/06/08… Lower S&P close one session later
09/26/08… Lower S&P close one session later
04/22/08… Lower S&P close one session later
03/17/08… No lower close within next two sessions
03/04/08… Lower S&P close two sessions later
11/05/07… Lower S&P close two sessions later
09/07/07… Lower S&P close one session later
09/05/07… Lower S&P close two sessions later
06/05/07… Lower S&P close one session later
03/27/07… Lower S&P close one session later
07/05/06… Lower S&P close two sessions later
03/07/06… Lower S&P close two sessions later
10/06/05… Lower S&P close two sessions later
09/19/05… Lower S&P close one session later
In 25 out of the last 30 occurrences, or 83% of the time, S&P futures posted a subsequently lower close one or two trading days later, significantly above the 58% random odds for a lower S&P close 1-2 days later in the same time frame. If S&P futures settle back under the day’s midpoint, I’d still be on watch for a short-term bottom given yesterday’s NDX outperformance and the reduced institutional selling during today’s session.
From a longer-term perspective, note that today’s sharply lower open has sent the Last Hour indicator up over 200 points. This reinforces the notion that the long-term retracement phase is underway, a bearish sign until the retracement is complete (which requires the Last Hour to rise another 1,000 points or so from current levels).