First Lower Close in a Week

SPX on track to post its first lower close after a five-day win streak. This pattern traditionally leads to an upside rebound the following session. The last thirty instances in which the SPX closed lower after a series of five or more up days are listed below. Note the definitive tendency for the dominant uptrend to resume the following session. In 24 out of the last 30 occurrences, or 80% of the time the S&P closed higher the next day, significantly above the 55% random chance for a higher SPX close one day later in the same time frame…

First down day after a series of five or more up days
07/14/10… S&P500 +0.1% next day
04/16/10… S&P500 +0.5% next day
03/08/10… S&P500 +0.2% next day
01/12/10… S&P500 +0.8% next day
12/29/09… S&P500 +0.0% next day
11/10/09… S&P500 +0.5% next day
10/13/09… S&P500 +1.8% next day
09/11/09… S&P500 +0.6% next day
12/01/08… S&P500 +4.0% next day
07/10/07… S&P500 +0.6% next day
06/05/07… S&P500 -0.9% next day
05/08/07… S&P500 +0.3% next day
04/19/07… S&P500 +0.9% next day
04/11/07… S&P500 +0.6% next day
11/20/06… S&P500 +0.2% next day
10/27/06… S&P500 +0.0% next day
08/21/06… S&P500 +0.1% next day
03/20/06… S&P500 -0.6% next day
01/10/06… S&P500 +0.4% next day
11/28/05… S&P500 +0.0% next day
10/03/05… S&P500 -1.0% next day
07/18/05… S&P500 +0.7% next day
06/20/05… S&P500 -0.2% next day
02/17/05… S&P500 +0.1% next day
11/08/04… S&P500 -0.1% next day
08/03/04… S&P500 -0.1% next day
05/28/04… S&P500 +0.1% next day
10/08/03… S&P500 +0.5% next day
09/05/03… S&P500 +1.0% next day
08/13/03… S&P500 +0.7% next day

Also noteworthy that the NDX is hovering near unchanged on the day and is currently posting an inside day despite 2:1 negative breadth on the NASDAQ exchange. Historically, when the NDX has managed to post an inside day despite lopsided negative breadth, higher prices usually follow over the next few sessions. Every occurrence since 1990 is listed below…

Nasdaq Breadth 2:1 Negative & Inside Day
09/07/10… NDX  +1.9% three sessions later
08/13/10… NDX  +1.8% three sessions later
05/07/10… NDX  +6.8% three sessions later
03/24/10… NDX  +0.5% three sessions later
03/24/09… NDX +1.4% three sessions later
12/15/08… NDX +1.9% three sessions later
11/14/08… NDX -7.8% three sessions later
10/27/08… NDX +14.0% three sessions later
07/14/08… NDX +3.1% three sessions later
11/19/07… NDX +0.4% three sessions later
07/27/07… NDX -0.6% three sessions later
06/22/07… NDX +0.6% three sessions later
03/02/07… NDX +0.6% three sessions later
01/05/07… NDX +1.7% three sessions later
08/11/06… NDX +5.5% three sessions later
10/18/05… NDX +1.8% three sessions later
02/24/03… NDX +0.1% three sessions later
01/30/03… NDX -1.4% three sessions later
10/09/02… NDX +11.2% three sessions later
09/20/01… NDX +2.0% three sessions later

Finally, with the SPX currently off 0.8% and the NDX only down 0.2%, I would note a short-term bullish signal should the S&P finish down in excess of 1% while the NDX closes down less than 0.5% Listed below are each of the last thirty instances in which this pattern occurred. Note that in 24 out of 30 cases, or 80% of the time, the S&P closed at a higher level three sessions later, significantly greater than the 55% at-any-time odds for a higher S&P three sessions later…

S&P500 Drops 1%+, NDX Down Less than 0.5%
05/24/10… S&P500 +2.7% three days later
10/26/09… S&P500 -0.1% three days later
06/03/09… S&P500 +0.9% three days later
05/15/09… S&P500 +2.3% three days later
05/11/09… S&P500 -1.8% three days later
04/27/09… S&P500 +1.8% three days later
03/19/09… S&P500 +2.8% three days later
02/20/09… S&P500 -0.7% three days later
10/29/08… S&P500 +3.9% three days later
10/10/08… S&P500 +1.0% three days later
10/08/08… S&P500 +1.9% three days later
08/12/08… S&P500 +0.7% three days later
07/31/08… S&P500 +1.4% three days later
07/15/08… S&P500 +3.8% three days later
05/23/08… S&P500 +1.6% three days later
06/13/06… S&P500 +2.3% three days later
05/12/05… S&P500 +1.2% three days later
03/09/05… S&P500 -0.0% three days later
04/16/03… S&P500 +3.6% three days later
01/22/03… S&P500 -3.5% three days later
10/09/02… S&P500 +8.3% three days later
09/24/02… S&P500 +1.0% three days later
04/29/02… S&P500 +1.8% three days later
03/06/00… S&P500 +0.8% three days later
02/16/00… S&P500 -2.6% three days later
05/27/99… S&P500 +1.1% three days later
01/14/99… S&P500 +3.7% three days later
07/09/97… S&P500 +1.2% three days later
03/13/97… S&P500 +0.0% three days later
04/10/96… S&P500 +1.4% three days later

Categories : Archived Intraday Commentary, Intraday Commentary

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