Can NDX Make it Nine in a Row vs. SPX?
By
Rennie on Thursday, September 23rd, 2010 at 2:04 am
NASDAQ volume has doubled NYSE (floor) volume 7 of 8 sessions since last Monday and the NDX has outperformed the SPX each of the last eight sessions, clear evidence of a speculative-driven rally. Note that cumulative TICKscore and Cumulative TICK both remain in sideways trends, reflecting a lack of institutional participation. Both charts indicate institutions were buyers from early July to early August, but since then buy/sell pressure has been very mixed with no clear trend from TICKscore and a downward trend for Cumulative TICK. It’s difficult to characterize that as positive, but nonetheless it would be noteworthy if speculators drive the NDX to another session of outperformance on Thursday. We’ve seen a number of cases over the years in which the NDX outperformed the SPX for 7 or even 8 sessions and the market often fell apart over the next month. But when the streak has extended to 9, the Nasdaq has typically remained on an upward course over the next month. It’s only occurred nine times since inception of the NDX, but performance has been consistently positive…
NDX Outperforms SPX Nine Consecutive Sessions
07/15/05… NDX +0.9% one month later
08/21/03… NDX +7.4% one month later
11/12/99… NDX +12.2% one month later
05/23/95… NDX +6.4% one month later
12/10/91… NDX +18.2% one month later
05/24/90… NDX -0.5% one month later
09/11/89… NDX +6.2% one month later
05/09/89… NDX +8.5% one month later
05/06/88… NDX +1.4% one month later
An ‘up September’ has a good track record of leading to a subsequently higher monthly close in October or November (25/27 cases since 1950), so another day of NDX outperformance would suggest the follow-through month could come immediately. Seasonally, the last few sessions of a big up month are prone to profit-taking, but the first week of the following month is normally quite bullish – see this post from late July.
Can NDX Make it Nine in a Row vs. SPX?
By Rennie on Thursday, September 23rd, 2010 at 2:04 amNASDAQ volume has doubled NYSE (floor) volume 7 of 8 sessions since last Monday and the NDX has outperformed the SPX each of the last eight sessions, clear evidence of a speculative-driven rally. Note that cumulative TICKscore and Cumulative TICK both remain in sideways trends, reflecting a lack of institutional participation. Both charts indicate institutions were buyers from early July to early August, but since then buy/sell pressure has been very mixed with no clear trend from TICKscore and a downward trend for Cumulative TICK. It’s difficult to characterize that as positive, but nonetheless it would be noteworthy if speculators drive the NDX to another session of outperformance on Thursday. We’ve seen a number of cases over the years in which the NDX outperformed the SPX for 7 or even 8 sessions and the market often fell apart over the next month. But when the streak has extended to 9, the Nasdaq has typically remained on an upward course over the next month. It’s only occurred nine times since inception of the NDX, but performance has been consistently positive…
NDX Outperforms SPX Nine Consecutive Sessions
07/15/05… NDX +0.9% one month later
08/21/03… NDX +7.4% one month later
11/12/99… NDX +12.2% one month later
05/23/95… NDX +6.4% one month later
12/10/91… NDX +18.2% one month later
05/24/90… NDX -0.5% one month later
09/11/89… NDX +6.2% one month later
05/09/89… NDX +8.5% one month later
05/06/88… NDX +1.4% one month later
An ‘up September’ has a good track record of leading to a subsequently higher monthly close in October or November (25/27 cases since 1950), so another day of NDX outperformance would suggest the follow-through month could come immediately. Seasonally, the last few sessions of a big up month are prone to profit-taking, but the first week of the following month is normally quite bullish – see this post from late July.