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The S&P500 posted its second consecutive week of lower lows and lower closes, yet the index is still above its four-week ago close. That’s a pretty rare price pattern, with only 19 occurrences since 1970. Stocks generally did well in the four weeks to follow, with the S&P flat-to-up in all but two cases. 2% moves were 10-1…

Weekly SPX Two Lower Lows and Closes, > 4wk Ago Close
01/14/22… SPX ??? four weeks later
05/04/18… SPX +2.7% four weeks later
05/06/16… SPX +2.0% four weeks later
01/09/15… SPX +0.5% four weeks later
10/04/13… SPX +4.2% four weeks later
03/10/06… SPX +1.1% four weeks later
11/21/03… SPX +5.2% four weeks later
03/28/02… SPX -6.2% four weeks later
05/12/00… SPX +2.5% four weeks later
03/23/89… SPX +7.1% four weeks later
01/08/88… SPX +3.1% four weeks later
11/26/82… SPX +3.6% four weeks later
12/18/81… SPX -6.2% four weeks later
10/23/81… SPX +2.6% four weeks later
07/08/77… SPX -1.0% four weeks later
08/10/73… SPX -0.0% four weeks later
04/28/72… SPX +2.8% four weeks later
03/24/72… SPX +1.3% four weeks later
07/23/71… SPX -0.6% four weeks later
10/23/70… SPX -0.1% four weeks later

One supporting factor for stocks is sentiment. AAII’s latest small investor survey took a sharp turn to the negative as only 25% of respondents considered themselves bullish. That ties the reading from last month for the lowest percentage of bulls in the past year. It’s also the sixth negative AAII sentiment poll in the last eight weeks. When this pattern of 6/8 weeks negative is in effect, stocks tend to rally. The table below begins with the date when 6 of the last 8 weeks posted a negative AAII spread and ends with the date when this is no longer the case. Over 30 separate occurrences since 1990, the S&P was up 23 times, down 7 times…

AAII Negative 6/8 Weeks
01/14/22 – ???
03/20/20 – 11/06/20… SPX +52.3%
09/27/19 – 10/18/19… SPX +0.8%
06/21/19 – 07/19/19… SPX +0.9%
12/28/18 – 01/25/19… SPX +7.2%
11/30/18 – 12/07/18… SPX -4.6%
04/21/17 – 05/05/17… SPX +2.2%
10/14/16 – 11/18/16… SPX +2.3%
06/17/16 – 07/08/16… SPX +2.8%
01/22/16 – 03/11/16… SPX +6.1%
08/21/15 – 09/04/15… SPX -2.5%
09/11/15 – 09/25/15… SPX -1.5%
11/09/12 – 12/14/12… SPX +2.5%
05/25/12 – 08/17/12… SPX +7.7%
09/16/11 – 10/21/11… SPX +1.8%
06/17/11 – 07/08/11… SPX +5.7%
07/10/09 – 08/14/09… SPX +14.2%
12/12/08 – 04/17/09… SPX -1.1%
07/11/08 – 11/07/08… SPX -24.9%
12/28/07 – 04/25/08… SPX -5.5%
06/23/06 – 09/08/06… SPX +4.3%
05/06/05 – 05/27/05… SPX +2.3%
02/07/03 – 04/11/03… SPX +4.7%
06/14/02 – 08/30/02… SPX -9.0%
10/02/98 – 10/30/98… SPX +9.6%
09/13/96 – 09/27/96… SPX +0.9%
04/15/94 – 06/10/94… SPX +2.7%
05/21/93 – 10/22/93… SPX +4.0%
08/14/92 – 11/13/92… SPX +0.7%
09/07/90 – 02/15/91… SPX +14.2%
03/02/90 – 04/06/90… SPX +1.5%

Like the price pattern earlier, this isn’t strong enough of an edge to add to the board, but the combination of the two does suggest a positive backdrop.

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