Over 400 Advancing Issues Among SPX Components for Third Day in a Row
By
Rennie on Friday, October 7th, 2011 at 2:32 am
Thursday was the third consecutive session with 400 or more advancing issues among S&P500 components. This pattern has only been seen four other times, but it’s interesting to note all four led to a lower market three sessions later…
Three Consecutive Days of 400+ SPX Advancers
10/06/11… S&P500 ??? three sessions later
09/15/11… S&P500 -0.6% three sessions later
09/03/10… S&P500 -0.0% three sessions later
07/26/10… S&P500 -1.2% three sessions later
01/02/09… S&P500 -2.7% three sessions later
It may not be until early next week that a selloff emerges. Historically, back-to-back gains of 0.5%+ for the S&P prior to the jobs report release has led to further upside or limited downside on the day of the release, with 14 out of 18 occurrences since 1994 leading to a higher S&P close and no losses greater than 1%…
S&P500 on day of Employment Report release when +0.5% Prior Two Consecutive Sessions
10/07/11… S&P500 ???
12/03/10… S&P500 +0.3%
09/03/10… S&P500 +1.3%
04/03/09… S&P500 +1.0%
12/07/07… S&P500 -0.2%
02/02/07… S&P500 +0.2%
06/02/06… S&P500 +0.2%
11/05/04… S&P500 +0.4%
07/03/03… S&P500 -0.8%
02/01/02… S&P500 -0.7%
01/04/02… S&P500 +0.6%
12/03/99… S&P500 +1.7%
11/05/99… S&P500 +0.6%
07/02/99… S&P500 +0.8%
08/07/98… S&P500 -0.0%
04/03/98… S&P500 +0.2%
10/03/97… S&P500 +0.5%
07/03/97… S&P500 +1.4%
08/02/96… S&P500 +1.9%
The Last Hour indicator hit a new high for the year as it continues to build on Tuesday’s big 565-point gain. It still has another 750 or so points to go before the retracement is complete (depending on how precise you want to be), but at least we’re making progress. The final phase of the retracement often coincides with a sharp decline in the market, so best to let this move play out before calling a bottom. Besides the Last Hour, there are a number of reasons to stay cautious here…
The number of sessions over the last 50 with 400 or more advancers or decliners (among S&P500 components) continues to climb, and is now just a handful away from the record number hit back in December 2008. After this type of surge in lopsided breadth days, the market typically doesn’t put in a sustainable bottom until the number of 400+ breadth days drops under 20 (Thursday’s close was 34), suggesting conditions remain too volatile at the present time.
The end of September triggered a sell on the 20-month moving average strategy. The S&P needs to close back over 1210 by the end of October to switch back over to a buy. Limiting long positions to only those times when the monthly SPX closed over its 20-day average has been a very effective timing strategy with minimal whipsaws. See this column from February for the track record.
The big spike in volatility coinciding with the September 21st Fed announcement implies limited upside heading into mid-November. Over the past eight occurrences of a similar spike in vol on an FOMC day, the S&P’s best performance looking out two months was +3%. See http://markettells.com/2011/09/spike-in-volatility-indicates-market-surprised-by-fomc-announcement/
The S&P is up 3% since the third quarter came to a close last week. Recall from this September 25th column that we need to see a 5% move to the upside after a 10% down quarter to confirm the likelihood of an up quarter. A 5% move (which equates with SPX hitting 1188) would suggest the S&P will finish out Q4 with greater than a 5% gain.
Cumulative TICKscore continues its relentless decline, highlighting the persistent downside bias to the NYSE TICK over the past year. It will be some time before we see higher highs from this indicator.
We’re coming up on the tenth consecutive week with a sub-50 Market Vane survey. Commodity trading advisors turned bearish during the first week of August when the S&P plunged through 1200, and that bias has stuck as the S&P has repeatedly tried and failed to successfully pierce the 1200 area. I don’t think we’ll see this smart money group turn bullish until we see a move over 1200 that sticks.
Over 400 Advancing Issues Among SPX Components for Third Day in a Row
By Rennie on Friday, October 7th, 2011 at 2:32 amThursday was the third consecutive session with 400 or more advancing issues among S&P500 components. This pattern has only been seen four other times, but it’s interesting to note all four led to a lower market three sessions later…
Three Consecutive Days of 400+ SPX Advancers
10/06/11… S&P500 ??? three sessions later
09/15/11… S&P500 -0.6% three sessions later
09/03/10… S&P500 -0.0% three sessions later
07/26/10… S&P500 -1.2% three sessions later
01/02/09… S&P500 -2.7% three sessions later
It may not be until early next week that a selloff emerges. Historically, back-to-back gains of 0.5%+ for the S&P prior to the jobs report release has led to further upside or limited downside on the day of the release, with 14 out of 18 occurrences since 1994 leading to a higher S&P close and no losses greater than 1%…
S&P500 on day of Employment Report release when +0.5% Prior Two Consecutive Sessions
10/07/11… S&P500 ???
12/03/10… S&P500 +0.3%
09/03/10… S&P500 +1.3%
04/03/09… S&P500 +1.0%
12/07/07… S&P500 -0.2%
02/02/07… S&P500 +0.2%
06/02/06… S&P500 +0.2%
11/05/04… S&P500 +0.4%
07/03/03… S&P500 -0.8%
02/01/02… S&P500 -0.7%
01/04/02… S&P500 +0.6%
12/03/99… S&P500 +1.7%
11/05/99… S&P500 +0.6%
07/02/99… S&P500 +0.8%
08/07/98… S&P500 -0.0%
04/03/98… S&P500 +0.2%
10/03/97… S&P500 +0.5%
07/03/97… S&P500 +1.4%
08/02/96… S&P500 +1.9%
The Last Hour indicator hit a new high for the year as it continues to build on Tuesday’s big 565-point gain. It still has another 750 or so points to go before the retracement is complete (depending on how precise you want to be), but at least we’re making progress. The final phase of the retracement often coincides with a sharp decline in the market, so best to let this move play out before calling a bottom. Besides the Last Hour, there are a number of reasons to stay cautious here…
The number of sessions over the last 50 with 400 or more advancers or decliners (among S&P500 components) continues to climb, and is now just a handful away from the record number hit back in December 2008. After this type of surge in lopsided breadth days, the market typically doesn’t put in a sustainable bottom until the number of 400+ breadth days drops under 20 (Thursday’s close was 34), suggesting conditions remain too volatile at the present time.
The end of September triggered a sell on the 20-month moving average strategy. The S&P needs to close back over 1210 by the end of October to switch back over to a buy. Limiting long positions to only those times when the monthly SPX closed over its 20-day average has been a very effective timing strategy with minimal whipsaws. See this column from February for the track record.
The big spike in volatility coinciding with the September 21st Fed announcement implies limited upside heading into mid-November. Over the past eight occurrences of a similar spike in vol on an FOMC day, the S&P’s best performance looking out two months was +3%. See http://markettells.com/2011/09/spike-in-volatility-indicates-market-surprised-by-fomc-announcement/
The S&P is up 3% since the third quarter came to a close last week. Recall from this September 25th column that we need to see a 5% move to the upside after a 10% down quarter to confirm the likelihood of an up quarter. A 5% move (which equates with SPX hitting 1188) would suggest the S&P will finish out Q4 with greater than a 5% gain.
Cumulative TICKscore continues its relentless decline, highlighting the persistent downside bias to the NYSE TICK over the past year. It will be some time before we see higher highs from this indicator.
We’re coming up on the tenth consecutive week with a sub-50 Market Vane survey. Commodity trading advisors turned bearish during the first week of August when the S&P plunged through 1200, and that bias has stuck as the S&P has repeatedly tried and failed to successfully pierce the 1200 area. I don’t think we’ll see this smart money group turn bullish until we see a move over 1200 that sticks.