On Today’s BKX/SOX Divergence
By
Rennie on Friday, June 11th, 2010 at 1:41 pm
Thursday’s lopsided up volume session represented the fifth 90% up volume day in the last month and the fourth 90%+ up volume session to appear in the SPX 1085-1105 range. The S&P ended up lower three days later in each of the last four cases. One clue as to whether that trend will be broken is if today’s high is taken out Monday. S&P futures have already made the customary higher high after Thursday’s 90% up volume session, which makes today’s high a key level to watch on Monday. A break of that high (currently SPU 1084.50) would trigger a short-term buy setup and would point to a S&P close above today’s high Monday or Tuesday. See this June 3rd post for a recent track record.
I’d add that our TICKscore indicator is currently at -11 and is on the verge of breaking into new lows after nearly erasing yesterday’s +13 closing reading. This continues to suggest an absence of institutional support, which makes it difficult to trust the upside for more than a short-term move.
There’s an interesting divergence taking shape today as semiconductors and financials battle for control. Currently the SOX is up over 1% on the day while the BKX is down more than 1%. Looking back at instances when a similar divergence initially occurred, it seems semiconductors usually win the battle for control over the short-term…
SOX +1%, BKX -1%
12/03/09… S&P500 +0.6% next session
07/17/09… S&P500 +1.1% next session
05/27/09… S&P500 +1.5% next session
05/19/09… S&P500 -0.5% next session
04/30/09… S&P500 +0.5% next session
04/22/09… S&P500 +1.0% next session
04/08/09… S&P500 +3.8% next session
03/13/09… S&P500 -0.4% next session
03/03/09… S&P500 +2.4% next session
02/12/09… S&P500 -1.0% next session
01/15/09… S&P500 +0.8% next session
12/09/08… S&P500 +1.2% next session
09/24/08… S&P500 +2.0% next session
08/07/08… S&P500 +2.4% next session
07/15/08… S&P500 +2.5% next session
06/04/08… S&P500 +2.0% next session
05/30/08… S&P500 -1.1% next session
04/21/08… S&P500 -0.9% next session
04/09/08… S&P500 +0.5% next session
02/11/08… S&P500 +0.7% next session
01/18/08… S&P500 -1.1% next session
03/06/07… S&P500 -0.3% next session
06/14/06… S&P500 +2.1% next session
11/30/05… S&P500 +1.2% next session
10/19/04… S&P500 +0.0% next session
09/20/04… S&P500 +0.6% next session
05/07/04… S&P500 -1.1% next session
04/02/04… S&P500 +0.8% next session
08/01/03… S&P500 +0.3% next session
04/16/03… S&P500 +1.6% next session
Of the last 30 instances in which the SOX closed up 1%+ and the BKX closed down 1%+ (for the first time in at least two sessions), the S&P rallied the next day in 22 out of 30 occurrences, or 73% of the time, well ahead of the 54% at-any-time odds for a higher S&P one session later. The S&P fell more than 1% the next day only twice, while it rallied more than 1% twelve times.
On Today’s BKX/SOX Divergence
By Rennie on Friday, June 11th, 2010 at 1:41 pmThursday’s lopsided up volume session represented the fifth 90% up volume day in the last month and the fourth 90%+ up volume session to appear in the SPX 1085-1105 range. The S&P ended up lower three days later in each of the last four cases. One clue as to whether that trend will be broken is if today’s high is taken out Monday. S&P futures have already made the customary higher high after Thursday’s 90% up volume session, which makes today’s high a key level to watch on Monday. A break of that high (currently SPU 1084.50) would trigger a short-term buy setup and would point to a S&P close above today’s high Monday or Tuesday. See this June 3rd post for a recent track record.
I’d add that our TICKscore indicator is currently at -11 and is on the verge of breaking into new lows after nearly erasing yesterday’s +13 closing reading. This continues to suggest an absence of institutional support, which makes it difficult to trust the upside for more than a short-term move.
There’s an interesting divergence taking shape today as semiconductors and financials battle for control. Currently the SOX is up over 1% on the day while the BKX is down more than 1%. Looking back at instances when a similar divergence initially occurred, it seems semiconductors usually win the battle for control over the short-term…
SOX +1%, BKX -1%
12/03/09… S&P500 +0.6% next session
07/17/09… S&P500 +1.1% next session
05/27/09… S&P500 +1.5% next session
05/19/09… S&P500 -0.5% next session
04/30/09… S&P500 +0.5% next session
04/22/09… S&P500 +1.0% next session
04/08/09… S&P500 +3.8% next session
03/13/09… S&P500 -0.4% next session
03/03/09… S&P500 +2.4% next session
02/12/09… S&P500 -1.0% next session
01/15/09… S&P500 +0.8% next session
12/09/08… S&P500 +1.2% next session
09/24/08… S&P500 +2.0% next session
08/07/08… S&P500 +2.4% next session
07/15/08… S&P500 +2.5% next session
06/04/08… S&P500 +2.0% next session
05/30/08… S&P500 -1.1% next session
04/21/08… S&P500 -0.9% next session
04/09/08… S&P500 +0.5% next session
02/11/08… S&P500 +0.7% next session
01/18/08… S&P500 -1.1% next session
03/06/07… S&P500 -0.3% next session
06/14/06… S&P500 +2.1% next session
11/30/05… S&P500 +1.2% next session
10/19/04… S&P500 +0.0% next session
09/20/04… S&P500 +0.6% next session
05/07/04… S&P500 -1.1% next session
04/02/04… S&P500 +0.8% next session
08/01/03… S&P500 +0.3% next session
04/16/03… S&P500 +1.6% next session
Of the last 30 instances in which the SOX closed up 1%+ and the BKX closed down 1%+ (for the first time in at least two sessions), the S&P rallied the next day in 22 out of 30 occurrences, or 73% of the time, well ahead of the 54% at-any-time odds for a higher S&P one session later. The S&P fell more than 1% the next day only twice, while it rallied more than 1% twelve times.