Sign of Persistence from the Nasdaq100 + A Major Divergence Forming
By
Rennie on Friday, June 18th, 2010 at 2:32 am
Another day of strong price action as the Nasdaq100 posted a seventh consecutive session with higher highs and higher lows. That’s an intermediate-term bullish sign, particularly the higher lows as it signals a real absence of selling pressure. Historically, this price pattern has a good track record of leading to a higher NDX two weeks later. The last 30 separate instances in which the NDX initially posted seven straight higher lows are listed in the table below…
Seven Higher Lows for Nasdaq100 (NDX)
06/17/10… NDX ??? two weeks later
12/29/09… NDX +0.8% two weeks later
11/11/09… NDX +0.6% two weeks later
07/22/09… NDX +3.2% two weeks later
11/04/08… NDX -16.2% two weeks later
04/10/07… NDX +2.3% two weeks later
04/06/06… NDX -1.7% two weeks later
07/18/05… NDX +2.6% two weeks later
05/20/05… NDX +1.1% two weeks later
12/26/03… NDX +6.6% two weeks later
10/16/03… NDX -0.7% two weeks later
08/19/03… NDX +4.7% two weeks later
08/02/01… NDX -9.7% two weeks later
02/09/00… NDX +7.2% two weeks later
11/11/99… NDX +9.4% two weeks later
01/08/99… NDX +1.2% two weeks later
12/23/98… NDX +8.5% two weeks later
11/24/98… NDX +6.6% two weeks later
06/23/98… NDX +5.8% two weeks later
02/04/98… NDX +2.9% two weeks later
11/07/96… NDX +0.6% two weeks later
09/20/96… NDX +2.1% two weeks later
04/22/96… NDX +2.9% two weeks later
03/19/96… NDX -2.2% two weeks later
02/06/96… NDX +1.3% two weeks later
01/25/96… NDX +9.0% two weeks later
08/14/95… NDX -3.2% two weeks later
07/10/95… NDX -1.9% two weeks later
06/23/95… NDX +5.3% two weeks later
03/13/95… NDX +3.7% two weeks later
02/09/95… NDX +0.5% two weeks later
Note that in 23 out of the last 30 occurrences, or 77% of the time, the Nasdaq100 closed at a higher level two weeks later, significantly above the 57% random odds for a higher NDX two weeks later in the same time frame.
The timing of that signal is interesting when you consider Cumulative TICK came very close to hitting a two-month high this Tuesday. Had it closed just slightly higher it would have triggered a two-week buy signal (see this March 7th column). The fact that it was so close in conjunction with the bullish price action among tech stocks suggests higher prices heading into the July 4th holiday. Whether the rally persists much beyond that point is questionable given the lack of institutional support. Note from the TICKscore chart that a major negative divergence is in the works now that the S&P has exceeded its late-May high while cumulative TICKscore is nowhere near those levels. We saw a similar negative divergence in early April that led to a bit more upside over the intermediate-term but ultimately preceded a major top.
Sign of Persistence from the Nasdaq100 + A Major Divergence Forming
By Rennie on Friday, June 18th, 2010 at 2:32 amAnother day of strong price action as the Nasdaq100 posted a seventh consecutive session with higher highs and higher lows. That’s an intermediate-term bullish sign, particularly the higher lows as it signals a real absence of selling pressure. Historically, this price pattern has a good track record of leading to a higher NDX two weeks later. The last 30 separate instances in which the NDX initially posted seven straight higher lows are listed in the table below…
Seven Higher Lows for Nasdaq100 (NDX)
06/17/10… NDX ??? two weeks later
12/29/09… NDX +0.8% two weeks later
11/11/09… NDX +0.6% two weeks later
07/22/09… NDX +3.2% two weeks later
11/04/08… NDX -16.2% two weeks later
04/10/07… NDX +2.3% two weeks later
04/06/06… NDX -1.7% two weeks later
07/18/05… NDX +2.6% two weeks later
05/20/05… NDX +1.1% two weeks later
12/26/03… NDX +6.6% two weeks later
10/16/03… NDX -0.7% two weeks later
08/19/03… NDX +4.7% two weeks later
08/02/01… NDX -9.7% two weeks later
02/09/00… NDX +7.2% two weeks later
11/11/99… NDX +9.4% two weeks later
01/08/99… NDX +1.2% two weeks later
12/23/98… NDX +8.5% two weeks later
11/24/98… NDX +6.6% two weeks later
06/23/98… NDX +5.8% two weeks later
02/04/98… NDX +2.9% two weeks later
11/07/96… NDX +0.6% two weeks later
09/20/96… NDX +2.1% two weeks later
04/22/96… NDX +2.9% two weeks later
03/19/96… NDX -2.2% two weeks later
02/06/96… NDX +1.3% two weeks later
01/25/96… NDX +9.0% two weeks later
08/14/95… NDX -3.2% two weeks later
07/10/95… NDX -1.9% two weeks later
06/23/95… NDX +5.3% two weeks later
03/13/95… NDX +3.7% two weeks later
02/09/95… NDX +0.5% two weeks later
Note that in 23 out of the last 30 occurrences, or 77% of the time, the Nasdaq100 closed at a higher level two weeks later, significantly above the 57% random odds for a higher NDX two weeks later in the same time frame.
The timing of that signal is interesting when you consider Cumulative TICK came very close to hitting a two-month high this Tuesday. Had it closed just slightly higher it would have triggered a two-week buy signal (see this March 7th column). The fact that it was so close in conjunction with the bullish price action among tech stocks suggests higher prices heading into the July 4th holiday. Whether the rally persists much beyond that point is questionable given the lack of institutional support. Note from the TICKscore chart that a major negative divergence is in the works now that the S&P has exceeded its late-May high while cumulative TICKscore is nowhere near those levels. We saw a similar negative divergence in early April that led to a bit more upside over the intermediate-term but ultimately preceded a major top.