Another Day, Another New Record
By
Rennie on Wednesday, July 7th, 2010 at 1:11 am
Institutions sold aggressively into Tuesday’s upside gap, leading to the second-lowest TICKscore reading of the last 20 days. Note from the long-term chart that selling pressure has been unusually consistent and intense the last two months and especially the last two weeks. Every day it seems a new (negative) record is being set. The OEX 2-day RSI closed under 2.0 for a record seven consecutive sessions as of last Friday. S&P futures tied the record for number of consecutive lower highs as of last Friday. On Tuesday, the QQQQ posted its 13th consecutive session with a close below the open, easily topping the previous record. I’m treating these rare developments as a warning not to consider buying merely because of oversold conditions. Weekly and monthly chart patterns suggest the potential for sharply lower prices this week and/or month, and the steepest selloffs usually occur in the midst of an already oversold market.
New 20-day lows across all exchanges increased to 1,700 Tuesday, more than tripling the number of new 20-day highs (500). That’s a sign of broad market weakness and indicates today’s rally is likely to give way to further selling. When the SPX closes higher on a day when new 20-day lows are over 1,000 and more than double the number of new highs, it’s usually followed by a lower close the following session. The last 30 occurrences are listed below…
New 20-day Lows >1000 & more than 2x New 20-day Highs, SPX Closes Up
07/06/10… S&P500 ??? next day
06/08/10… S&P500 -0.6% next day
05/25/10… S&P500 -0.6% next day
05/21/10… S&P500 -1.3% next day
02/05/10… S&P500 -0.9% next day
02/01/10… S&P500 +1.3% next day
01/27/10… S&P500 -1.2% next day
01/25/10… S&P500 -0.4% next day
11/02/09… S&P500 +0.2% next day
10/29/09… S&P500 -2.8% next day
07/06/09… S&P500 -2.0% next day
06/23/09… S&P500 +0.7% next day
03/06/09… S&P500 -1.0% next day
03/04/09… S&P500 -4.3% next day
02/24/09… S&P500 -1.1% next day
02/12/09… S&P500 -1.0% next day
01/23/09… S&P500 +0.6% next day
01/21/09… S&P500 -1.5% next day
01/15/09… S&P500 +0.8% next day
11/21/08… S&P500 +6.5% next day
11/18/08… S&P500 -6.1% next day
11/13/08… S&P500 -4.2% next day
10/28/08… S&P500 -1.1% next day
10/23/08… S&P500 -3.5% next day
10/16/08… S&P500 -0.6% next day
09/30/08… S&P500 -0.5% next day
09/26/08… S&P500 -8.8% next day
09/18/08… S&P500 +4.0% next day
09/16/08… S&P500 -4.7% next day
09/10/08… S&P500 +1.4% next day
09/05/08… S&P500 +2.1% next day
In 21 out of the last 30 occurrences, or 70% of the time, the S&P turned around and closed lower the following session. That’s significantly better than the 46% random chance for a lower S&P close one day later in the same time frame. Along with today’s weak NYSE TICK action, this reinforces that there was little to like in Tuesday’s trade.
Another Day, Another New Record
By Rennie on Wednesday, July 7th, 2010 at 1:11 amInstitutions sold aggressively into Tuesday’s upside gap, leading to the second-lowest TICKscore reading of the last 20 days. Note from the long-term chart that selling pressure has been unusually consistent and intense the last two months and especially the last two weeks. Every day it seems a new (negative) record is being set. The OEX 2-day RSI closed under 2.0 for a record seven consecutive sessions as of last Friday. S&P futures tied the record for number of consecutive lower highs as of last Friday. On Tuesday, the QQQQ posted its 13th consecutive session with a close below the open, easily topping the previous record. I’m treating these rare developments as a warning not to consider buying merely because of oversold conditions. Weekly and monthly chart patterns suggest the potential for sharply lower prices this week and/or month, and the steepest selloffs usually occur in the midst of an already oversold market.
New 20-day lows across all exchanges increased to 1,700 Tuesday, more than tripling the number of new 20-day highs (500). That’s a sign of broad market weakness and indicates today’s rally is likely to give way to further selling. When the SPX closes higher on a day when new 20-day lows are over 1,000 and more than double the number of new highs, it’s usually followed by a lower close the following session. The last 30 occurrences are listed below…
New 20-day Lows >1000 & more than 2x New 20-day Highs, SPX Closes Up
07/06/10… S&P500 ??? next day
06/08/10… S&P500 -0.6% next day
05/25/10… S&P500 -0.6% next day
05/21/10… S&P500 -1.3% next day
02/05/10… S&P500 -0.9% next day
02/01/10… S&P500 +1.3% next day
01/27/10… S&P500 -1.2% next day
01/25/10… S&P500 -0.4% next day
11/02/09… S&P500 +0.2% next day
10/29/09… S&P500 -2.8% next day
07/06/09… S&P500 -2.0% next day
06/23/09… S&P500 +0.7% next day
03/06/09… S&P500 -1.0% next day
03/04/09… S&P500 -4.3% next day
02/24/09… S&P500 -1.1% next day
02/12/09… S&P500 -1.0% next day
01/23/09… S&P500 +0.6% next day
01/21/09… S&P500 -1.5% next day
01/15/09… S&P500 +0.8% next day
11/21/08… S&P500 +6.5% next day
11/18/08… S&P500 -6.1% next day
11/13/08… S&P500 -4.2% next day
10/28/08… S&P500 -1.1% next day
10/23/08… S&P500 -3.5% next day
10/16/08… S&P500 -0.6% next day
09/30/08… S&P500 -0.5% next day
09/26/08… S&P500 -8.8% next day
09/18/08… S&P500 +4.0% next day
09/16/08… S&P500 -4.7% next day
09/10/08… S&P500 +1.4% next day
09/05/08… S&P500 +2.1% next day
In 21 out of the last 30 occurrences, or 70% of the time, the S&P turned around and closed lower the following session. That’s significantly better than the 46% random chance for a lower S&P close one day later in the same time frame. Along with today’s weak NYSE TICK action, this reinforces that there was little to like in Tuesday’s trade.