Cumulative TICKscore Approaching July Low

While it’s not the bellwether it once was, General Electric (GE) still sports the tenth-highest market cap of all S&P500 stocks (the top ten: XOM, AAPL, MSFT, BRK.B, WMT, GOOG, IBM, PG, JNJ, GE), so it’s interesting to note that Tuesday represented the seventh consecutive down day. Historically, this many consecutive lower closes has usually brought out some institutional buying pressure that gives shares a short-term lift. Whether this will continue to hold true in light of its significant drop in the market cap rankings remains to be seen, although it’s noteworthy that the last signal produced the first loss in recent memory. Since 1990, there have been seventeen separate instances in which GE posted seven straight lower closes…

GE Down Seven Consecutive Days
11/16/10… GE ???
10/23/09… GE -1.8% two sessions later
11/09/07… GE +2.2% two sessions later
01/25/06… GE +0.8% one session later
06/16/05… GE +1.1% one session later
07/16/03… GE +1.5% two sessions later
02/12/03… GE +1.0% two sessions later
09/03/02… GE +0.8% one session later
06/04/02… GE +0.3% one session later
04/29/02… GE +2.3% one session later
09/20/01… GE +3.1% one session later
01/05/00… GE +1.3% one session later
04/28/98… GE +1.5% one session later
08/05/97… GE +2.3% one session later
09/09/93… GE +0.8% one session later
01/31/92… GE +1.0% one session later
09/18/91… GE +0.2% one session later
09/20/90… GE +1.4% one session later

Institutional selling pressure was very heavy Tuesday, producing a -52 closing TICKscore. A couple of more days like that and the cumulative line will take out its July lows. Click here for an updated look at the longer-term cumulative TICKscore. The absence of institutional buying power (relatively high positive TICK readings) during the September-October rally has been a major cause for concern, and we could be witnessing price beginning to follow the lead of the weak NYSE TICK action. I’ve never seen this long a period of price moving one way while TICKscore heads the other direction, but in the few cases I could find with similar characteristics the TICK action proved to be the leader.

Short-term, the 2-day RSI for the S&P500 closed under 2.0 on Tuesday, historically a good indication of limited downside potential until we see a close back over 2.0. The table below lists each of the last thirty instances when the S&P’s 2-day RSI initially closed under 2.0…

S&P500 2-day RSI Closes Below 2.0
11/16/10… S&P500 ??? when 2day RSI >2
06/30/10… S&P500 -0.3% when 2day RSI >2 (three sessions)
06/24/10… S&P500 +0.3% when 2day RSI >2 (one session)
05/20/10… S&P500 +1.5% when 2day RSI >2 (one session)
09/02/09… S&P500 +0.9% when 2day RSI >2 (one session)
02/20/09… S&P500 +0.4% when 2day RSI >2 (two sessions)
10/08/08… S&P500 +1.9% when 2day RSI >2 (three sessions)
01/22/08… S&P500 +2.1% when 2day RSI >2 (one session)
01/04/08… S&P500 +0.3% when 2day RSI >2 (one session)
02/27/07… S&P500 +0.6% when 2day RSI >2 (one session)
06/13/06… S&P500 +0.5% when 2day RSI >2 (one session)
01/04/05… S&P500 -0.0% when 2day RSI >2 (two sessions)
08/06/04… S&P500 +0.1% when 2day RSI >2 (one session)
03/11/04… S&P500 +1.3% when 2day RSI >2 (one session)
01/22/03… S&P500 +1.0% when 2day RSI >2 (one session)
09/19/02… S&P500 +0.3% when 2day RSI >2 (one session)
09/03/02… S&P500 +1.8% when 2day RSI >2 (one session)
07/22/02… S&P500 +3.0% when 2day RSI >2 (two sessions)
04/26/02… S&P500 +0.1% when 2day RSI >2 (two sessions)
09/20/01… S&P500 +2.0% when 2day RSI >2 (two sessions)
09/07/01… S&P500 +0.6% when 2day RSI >2 (one session)
06/15/01… S&P500 -0.1% when 2day RSI >2 (two sessions)
02/09/01… S&P500 +1.2% when 2day RSI >2 (one session)
11/10/00… S&P500 +1.3% when 2day RSI >2 (two sessions)
10/11/00… S&P500 +0.8% when 2day RSI >2 (two sessions)
09/18/00… S&P500 +1.1% when 2day RSI >2 (one session)
04/14/00… S&P500 +3.3% when 2day RSI >2 (one session)
10/15/99… S&P500 +0.5% when 2day RSI >2 (one session)
08/04/99… S&P500 +0.6% when 2day RSI >2 (one session)
05/25/99… S&P500 +1.6% when 2day RSI >2 (one session)
04/19/99… S&P500 +1.3% when 2day RSI >2 (one session)

In 26 out of the last 30 cases, or 87% of the time, the S&P posted a subsequently higher close one or two sessions later, significantly above the 66% random chance. Also note that the worst loss by the time the signal was closed out was only 0.3%.

Categories : Archived EOD Commentary, End-of-Day Commentary

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