SPX Posts Fifth Week of Higher Highs

When the S&P500 initially closes higher four consecutive weeks, a higher high on the weekly S&P chart is a good indication that a fifth up week is in store. That’s what we’ve just seen this morning as the S&P traded above last week’s high of 1259.39. The table below highlights the last 30 times we’ve seen the S&P trade in a similar manner. Note that in 26 out of 30 cases, or 87% of the time, the S&P managed to hold onto a gain through the end of the week. Even when wrong, losses amounted to less than 1% in all but one case…

S&P Up Four Weeks, Posts Higher High on Week Five
12/23/10… S&P500 Ends Next Week ???
03/26/10… S&P500 Ends Next Week +1.0%
04/03/09… S&P500 Ends Next Week +1.7%
10/05/07… S&P500 Ends Next Week +0.3%
04/27/07… S&P500 Ends Next Week +0.8%
10/20/06… S&P500 Ends Next Week +0.6%
11/18/05… S&P500 Ends Next Week +1.6%
07/22/05… S&P500 Ends Next Week +0.0%
09/03/04… S&P500 Ends Next Week +0.9%
12/19/03… S&P500 Ends Next Week +0.7%
09/05/03… S&P500 Ends Next Week -0.3%
05/09/03… S&P500 Ends Next Week +1.2%
11/01/02… S&P500 Ends Next Week -0.7%
08/16/02… S&P500 Ends Next Week +1.3%
08/25/00… S&P500 Ends Next Week +0.9%
11/12/99… S&P500 Ends Next Week +1.9%
09/03/99… S&P500 Ends Next Week -0.4%
07/10/98… S&P500 Ends Next Week +1.9%
02/20/98… S&P500 Ends Next Week +1.5%
05/23/97… S&P500 Ends Next Week +0.1%
11/22/96… S&P500 Ends Next Week +1.1%
02/09/96… S&P500 Ends Next Week -1.3% (*)
02/17/95… S&P500 Ends Next Week +1.3%
08/13/93… S&P500 Ends Next Week +1.3%
12/04/92… S&P500 Ends Next Week +0.4%
12/27/91… S&P500 Ends Next Week +3.2%
02/08/91… S&P500 Ends Next Week +2.7%
11/24/89… S&P500 Ends Next Week +1.9%
07/28/89… S&P500 Ends Next Week +0.5%
06/02/89… S&P500 Ends Next Week +0.4%
04/21/89… S&P500 Ends Next Week +0.0%

Assuming the week does finish positive, it’s also noteworthy that
a fifth week of gains would tilt the odds in favor of lower prices to kick off 2011. The table below lists each of the last thirty occurrences in which the S&P500 initially posted five consecutive higher closes on its weekly chart…

S&P500 Up Five Consecutive Weeks
11/05/10… S&P500 -2.2% one week later
04/01/10… S&P500 +1.4% one week later
04/09/09… S&P500 +1.5% one week later
10/12/07… S&P500 -3.9% one week later
05/04/07… S&P500 +0.0% one week later
10/27/06… S&P500 -1.0% one week later
11/25/05… S&P500 -0.3% one week later
07/29/05… S&P500 -0.6% one week later
09/10/04… S&P500 +0.4% one week later
12/26/03… S&P500 +1.2% one week later
05/16/03… S&P500 -1.2% one week later
08/23/02… S&P500 -2.6% one week later
09/01/00… S&P500 -1.7% one week later
11/19/99… S&P500 -0.4% one week later
07/17/98… S&P500 -3.9% one week later
02/27/98… S&P500 +0.6% one week later
05/30/97… S&P500 +1.2% one week later
11/29/96… S&P500 -2.3% one week later
09/15/95… S&P500 -0.3% one week later
02/24/95… S&P500 -0.6% one week later
08/20/93… S&P500 +1.0% one week later
12/11/92… S&P500 +1.7% one week later (*)
01/03/92… S&P500 -1.0% one week later
02/15/91… S&P500 -0.9% one week later
12/01/89… S&P500 -0.6% one week later
08/04/89… S&P500 +0.2% one week later
06/09/89… S&P500 -1.6% one week later
04/28/89… S&P500 -0.7% one week later
02/03/89… S&P500 -1.7% one week later
06/26/87… S&P500 -0.5% one week later

Note that in 20 out of 30 cases, or 67% of the time, the S&P posted a lower weekly close after five consecutive up weeks, significantly above the 44% random odds for a lower weekly close one week later in the same time frame. The S&P gained more than 1.5% the next week only once, while it fell more than 1.5% eight times. That’s interesting when you consider that next week will encompass the first trading days of the new year, historically a very volatile time frame. In seven of the last ten years the S&P500 gained/lost 2% or more in the first three trading days of the year…

S&P500 First Three Days of the Year
2010… +2.0%
2009… +3.5%
2008… -3.9%
2007… -0.6%
2006… +2.0%
2005… -2.3%
2004… +1.1%
2003… +5.6%
2002… +2.1%
2001… +1.0%
2000… -4.6%

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

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