Looking Ahead to Next Week
By
Rennie on Thursday, January 20th, 2011 at 12:50 am
With the S&P500 poised to put in its first down week since November, I thought it would be helpful to review the stock market’s performance following similar price action on the weekly chart. The last 30 separate occurrences of a lower close on the weekly S&P chart after six or more consecutive up weeks are listed below. The most noteworthy point concerning the following week is the absence of any significant downside follow-through. The S&P500 closed down 1% or more the following week only one time (3%) vs. twelve instances of a 1%+ up week. The random chance of a 1% down week over the same time frame is 27%, so this represents a significant edge over random, not in terms of calling for an up week but in terms of calling for limited downside potential. This goes into effect at Friday’s close as long as the S&P ends the week with a loss (meaning a weekly close below SPX 1293).
First Down Week for S&P500 after Six or More Up Weeks
04/16/10… S&P500 +2.1% next week
04/24/09… S&P500 +1.3% next week
05/25/07… S&P500 +1.4% next week
09/24/04… S&P500 +1.9% next week
01/30/04… S&P500 +1.0% next week
03/27/98… S&P500 +2.5% next week
06/27/97… S&P500 +3.3% next week
09/17/93… S&P500 -0.3% next week
12/24/92… S&P500 -0.9% next week
09/08/89… S&P500 -1.1% next week (*)
12/27/85… S&P500 +0.6% next week
03/11/83… S&P500 -0.9% next week
04/30/82… S&P500 +2.6% next week
09/07/79… S&P500 +1.0% next week
09/01/78… S&P500 +3.0% next week
02/06/76… S&P500 +0.2% next week
03/17/72… S&P500 -0.4% next week
01/14/72… S&P500 +0.3% next week
02/19/71… S&P500 +0.0% next week
02/24/67… S&P500 +1.0% next week
01/21/66… S&P500 -0.2% next week
05/21/65… S&P500 -0.4% next week
10/16/64… S&P500 +0.4% next week
07/24/64… S&P500 -0.3% next week
03/20/64… S&P500 +0.3% next week
01/31/64… S&P500 +0.2% next week
09/27/63… S&P500 +1.0% next week
05/17/63… S&P500 -0.4% next week
02/08/63… S&P500 +0.4% next week
12/14/62… S&P500 +0.1% next week
Following is a recap of some intermediate-term signals triggered over the past month that are still in effect…
Back on December 22nd, the 20-day moving average of NYSE Down Volume (expressed as a percentage of total volume) fell below 40%. This triggered a two-month buy signal that calls for an SPX above 1258 in mid-February.
On January 3rd, the 14-bar RSI for the S&P500 closed over 75, an ‘overbought buy’ signal that usually leads to a higher S&P one month later. This points to an S&P above 1271 in the first week of February.
This month represents the sixth consecutive month that the S&P500 has posted ‘higher highs’ on the monthly chart, a pattern that usually leads to either a higher monthly high or a higher monthly close the next month. This suggests we’ll see the SPX trade above 1296 in February or close above January’s settlement at the end of February.
On January 3rd and 12th, S&P futures posted unfilled upside gaps, a pattern that has a good track record at calling for limited downside (<1%) over the next month. This indicates we should see the S&P find an area of support in the low 1270′s heading into the second week of February.
Looking Ahead to Next Week
By Rennie on Thursday, January 20th, 2011 at 12:50 amWith the S&P500 poised to put in its first down week since November, I thought it would be helpful to review the stock market’s performance following similar price action on the weekly chart. The last 30 separate occurrences of a lower close on the weekly S&P chart after six or more consecutive up weeks are listed below. The most noteworthy point concerning the following week is the absence of any significant downside follow-through. The S&P500 closed down 1% or more the following week only one time (3%) vs. twelve instances of a 1%+ up week. The random chance of a 1% down week over the same time frame is 27%, so this represents a significant edge over random, not in terms of calling for an up week but in terms of calling for limited downside potential. This goes into effect at Friday’s close as long as the S&P ends the week with a loss (meaning a weekly close below SPX 1293).
First Down Week for S&P500 after Six or More Up Weeks
04/16/10… S&P500 +2.1% next week
04/24/09… S&P500 +1.3% next week
05/25/07… S&P500 +1.4% next week
09/24/04… S&P500 +1.9% next week
01/30/04… S&P500 +1.0% next week
03/27/98… S&P500 +2.5% next week
06/27/97… S&P500 +3.3% next week
09/17/93… S&P500 -0.3% next week
12/24/92… S&P500 -0.9% next week
09/08/89… S&P500 -1.1% next week (*)
12/27/85… S&P500 +0.6% next week
03/11/83… S&P500 -0.9% next week
04/30/82… S&P500 +2.6% next week
09/07/79… S&P500 +1.0% next week
09/01/78… S&P500 +3.0% next week
02/06/76… S&P500 +0.2% next week
03/17/72… S&P500 -0.4% next week
01/14/72… S&P500 +0.3% next week
02/19/71… S&P500 +0.0% next week
02/24/67… S&P500 +1.0% next week
01/21/66… S&P500 -0.2% next week
05/21/65… S&P500 -0.4% next week
10/16/64… S&P500 +0.4% next week
07/24/64… S&P500 -0.3% next week
03/20/64… S&P500 +0.3% next week
01/31/64… S&P500 +0.2% next week
09/27/63… S&P500 +1.0% next week
05/17/63… S&P500 -0.4% next week
02/08/63… S&P500 +0.4% next week
12/14/62… S&P500 +0.1% next week
Following is a recap of some intermediate-term signals triggered over the past month that are still in effect…
Back on December 22nd, the 20-day moving average of NYSE Down Volume (expressed as a percentage of total volume) fell below 40%. This triggered a two-month buy signal that calls for an SPX above 1258 in mid-February.
On January 3rd, the 14-bar RSI for the S&P500 closed over 75, an ‘overbought buy’ signal that usually leads to a higher S&P one month later. This points to an S&P above 1271 in the first week of February.
This month represents the sixth consecutive month that the S&P500 has posted ‘higher highs’ on the monthly chart, a pattern that usually leads to either a higher monthly high or a higher monthly close the next month. This suggests we’ll see the SPX trade above 1296 in February or close above January’s settlement at the end of February.
On January 3rd and 12th, S&P futures posted unfilled upside gaps, a pattern that has a good track record at calling for limited downside (<1%) over the next month. This indicates we should see the S&P find an area of support in the low 1270′s heading into the second week of February.