The S&P and 8-week streaks

MrTopStep.com

With 7 straight weeks of higher closes, many readers are questioning if the S&P will make it 8 in a row. As we head into the final two trading days of November and into the first week of December, the S&P 500 shows no sign of letting up. As we have said many times, this is not like 1987, nor is it like 1999-2000. In fact, there is no time in history that we can compare with today.

In Asia 7 out of 11 markets closed higher and in Europe 8 out of 12 markets are trading higher. Today’s economic calendar starts out with the MBA purchase applications numbers, durable goods orders, Chicago Fed National Activity Index, Chicago PMI, consumer sentiment, leading indicators, EIA petroleum status report, EIA natural gas report, and 7-yr note auction.

The markets have been quiet leading up to the November month end, with the exception of over $400mil being sold on the cash close on Monday and $1.2bil to $2.bil being sold on the cash close yesterday. It’s obvious someone large is taking profits.

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ES 12 13 1 Min 11 26 2013 300x163 The S&P and 8 week streaks

The S&P and 8 week streaks

Let’s not mess around today; you want the stats, we got the stats. The S&P has been on a 7-week rip and the question is, can the S&P make it 8 weeks of higher closes? It’s a tough question after such a big run, but we think we can provide some clarity on the subject.

There have been 22 incidences of at least 8 straight weeks up since 1928. The following week was up 14 times and down 8. In four of those 14 up times the streak continued for 12 to 14 weeks. The longer-term implications of eight straight up are decidedly bullish and we still have 2 trading days left, so the jury is still out.

Earlier in the week I said that I thought we could see some sideways to lower price action; so far we have gotten the sideways but not much lower. Based on the big sell imbalance Tuesday we think we should see some selling again today, then buying on Friday’s close. Remember the exchange is open all day today, closed Thursday and only open for a half day on Friday.

8-week Streaks:

1928-04-14
1928-12-01
1943-01-23
1944-07-08
1949-08-11
1951-02-03
1955-07-08
1957-05-10
1958-10-10
1961-01-27
1963-04-26
1963-09-13
1964-01-17
1971-02-12
1972-03-10
1976-01-30
1985-11-22
1989-08-25
1993-09-10
1997-06-20
1998-03-20
2004-01-16

Our view

The Thanksgiving holiday will only add to the low-volume drag. Many traders and trading desks will let people cut out early today and not return until Monday. If you are going to be trading, you will have to be very patient.

As more people drop offline the algos will still be blasting away, so slow doesn’t mean the S&P won’t be moving. It will be, and what we do not want to see is people getting caught in a chop. Our view is to sell the early rally and buy weakness, keeping in mind what’s happened on the close the last two days.

And lastly, MrTopStep wants to wish everyone a great holiday…. see you Friday morning.

As always, keep an eye on the 10-handle rule and please use stops when trading futures and options.

  • In Asia, 7 out of 11 markets closed higher: Shanghai Comp. +0.82%, Hang Seng +0.53%, Nikkei -0.42%.
  • In Europe 8 of 12 markets are trading higher: DAX +0.31%, FTSE +0.12%.
  • Morning headline: “S&P Futures Seen Higher As Hewlett-Packard Sales Jump”
  • Total volume: LOW 1mil ESZ and 6.2k SPZ traded
  • Economic calendar: MBA purchase applications numbers, durable goods orders, Chicago Fed National Activity Index, Chicago PMI, consumer sentiment, leading indicators, EIA petroleum status report, EIA natural gas report, and 7-yr note auction.
  • E-mini S&P (Sep)1795.00-4.75 - -0.26%
  • Crude97.80-1.42 - -1.43%
  • Shanghai Composite0.00N/A - N/A
  • Hang Seng23910.471-128.08 - -0.53%
  • Nikkei 22515749.66+94.59 - +0.60%
  • DAX9300.74-101.22 - -1.08%
  • FTSE 1006543.46-51.87 - -0.79%
  • Euro1.3576

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 The S&P and 8 week streaks

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