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Our version of S&P’s trendline oscillator based on OEX components crossed above the +10 level on Friday, reflecting unusually overbought conditions. The last time this occurred in 2020, stocks dived over the next week. But looking back over every occurrence since the start of our database in 2008, you can see how unusual it is to see a big selloff. The normal outcome is a flat or small up week with an average gain of 1% and a max drawdown of 1.3%. That jibes with the ‘all or nothing’ cluster signal from last week that highlighted SPX 4470 as short-term support…

OEX Oscillator Crosses Above +10
03/25/22… SPX ??? one week later
06/05/20… SPX -3.8% one week later, max DD 6.6%
09/11/19… SPX +0.0% one week later, max DD 0.7%
09/09/19… SPX +0.6% one week later, max DD 0.7%
01/17/19… SPX +0.7% one week later, max DD 0.9%
02/21/17… SPX +0.1% one week later, max DD 0.5%
07/19/16… SPX -0.1% one week later, max DD 0.2%
07/11/16… SPX +1.4% one week later, max DD 0.1%
10/12/15… SPX +1.1% one week later, max DD 1.3%
11/10/14… SPX +0.3% one week later, max DD 0.4%
11/05/14… SPX +0.8% one week later, max DD 0.4%
10/29/14… SPX +1.9% one week later, max DD 0.4%
08/21/14… SPX +0.2% one week later, max DD 0.4%
10/22/13… SPX +1.2% one week later, max DD 0.8%
09/16/13… SPX +0.3% one week later, max DD 0.0%
07/18/13… SPX +0.1% one week later, max DD 0.6%
07/15/13… SPX +0.7% one week later, max DD 0.6%
03/11/13… SPX -0.4% one week later, max DD 0.7%
10/17/11… SPX +3.7% one week later, max DD 0.8%
09/14/10… SPX +1.8% one week later, max DD 0.6%
07/21/09… SPX +2.1% one week later, max DD 0.7%
03/23/09… SPX -4.1% one week later, max DD 5.2%

Download daily OEX Oscillator data from 2008 to present here.

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