I have been a bit busy lately due to some personal matters and have not been able to post lately.

I wanted to quickly point out that the two studies (TRIN and ADX related ST buy signals) presented in my last blog entry have been fulfilled today.

Note also that the pull back below 1725 on the nasdaq 100 may have presented a good buying opportunity based on this study as we are currently still trading just under 1725. Given that we did not close last week above 1725, that study suggests we will do so either this or next week.

TRIN, Reversal bar + ADX divergence indicating ST bounce

The Nasdaq 100 signal discussed in the last blog entry was triggered today. This suggests that the Nasdaq should bounce back and close above 1725 within the next 3 weeks (this being week 1 since this was signal triggered at the end of last week).

The NYSE Arms Index is also indicating a short term bounce may be at hand. The TRIN today closed at 2.33. Over the past decade there have been 45 instances where the TRIN closed above 2.0 while the S&P 500 was trading above it's 200MA. In 35 cases (or 77.78%) the S&P was trading higher within 2 days. That is significantly better than the 50.51% historical odds of the market closing higher within 2 days from any given close.

Lastly, the S&P painted an outside reversal bar today. It was interesting to note however that the ADX continued to climb despite what appeared to be a solid sell off on the surface. There have only been 16 previous occurrences where this has occurred. In 13 cases (or 81.25% of the time), the S&P was trading higher within 3 days.

Ticker	Date/Time	Close	3Day+	%Chg N1	%Chg N2	%Chg N3
SPX	12/14/1982	137.40	3.00	-1.57	-1.53	0.07
SPX	4/5/1983	151.90	3.00	-0.57	-0.09	0.63
SPX	4/25/1983	158.81	1.00	1.89	1.66	2.61
SPX	1/30/1984	162.87	1.00	0.33	-0.08	0.30
SPX	2/3/1984	160.91	0.00	-1.76	-1.35	-3.14
SPX	9/21/1987	310.54	1.00	2.89	3.43	2.96
SPX	1/23/1989	284.50	1.00	1.40	1.63	2.53
SPX	8/11/1989	344.74	3.00	-0.49	-0.01	0.27
SPX	11/1/1991	391.32	0.00	-0.27	-0.67	-0.34
SPX	8/21/1992	414.85	0.00	-1.00	-0.78	-0.32
SPX	4/18/1994	442.46	1.00	0.02	-0.11	1.42
SPX	3/21/1995	495.07	1.00	0.12	0.18	1.19
SPX	10/11/2007	1,554.41	1.00	0.48	-0.37	-1.02
SPX	11/26/2007	1,407.22	1.00	1.49	4.39	4.44
SPX	4/30/2008	1,385.59	1.00	1.71	2.04	1.58
SPX	5/20/2009	903.47	3.00	-1.68	-1.82	0.76
SPX	9/23/2009	1,060.87	0.00	0.00	0.00	0.00

Nasdaq 100 > 200 weekly MA

Update: Sept 17th Buy signals - the ST setup discussed was fullfilled on Sept 18th with a higher close. The intermediate term study remains on the board and suggests the market should close above 1065 my mid October.

Last week, Nasdaq 100 has essentially regained all it's losses since the Lehman crash. It has now crossed over it's 200 WEEKLY moving average and in overbought (as defined by a weekly RSI(14) > 70).

It would appear that this index is over extended and should be avoided. However history says otherwise and argues that there is a decent 1-3 week play here. Over the history of the Nasdaq 100, there have been 28 instances where the Nasdaq 100 closed above it's 200MA with an RSI(14) reading over 70. In 24 of those cases (or 86% of the time), the Nasdaq 100 went on to make another weekly higher close within the next 3 weeks. This suggest that if the Nasdaq dips below 1725, it could be a good buy for a 1 to 3 week play.

Ticker	Date/Time	Close	3Week+	%Chg N1	%Chg N2	%Chg N3
NDX	9/1/1989	223.51	3.00	-0.38	-0.69	0.17
NDX	9/22/1989	223.89	1.00	1.12	4.69	0.34
NDX	2/1/1991	234.45	1.00	4.27	5.92	6.05
NDX	3/28/1991	264.90	1.00	3.98	5.40	3.44
NDX	1/3/1992	334.82	1.00	3.67	4.45	3.17
NDX	2/7/1992	346.80	0.00	-0.03	-1.27	-0.27
NDX	12/4/1992	358.40	0.00	-2.10	-0.14	-0.23
NDX	1/8/1993	365.54	1.00	3.75	3.36	1.37
NDX	3/24/1995	455.43	3.00	-1.82	-2.51	0.77
NDX	4/28/1995	469.56	1.00	0.16	2.90	4.33
NDX	7/28/1995	574.18	2.00	-2.37	0.25	3.72
NDX	8/18/1995	595.52	3.00	-2.59	-3.75	1.47
NDX	9/20/1996	743.42	1.00	0.18	2.11	2.99
NDX	11/8/1996	798.66	1.00	0.10	2.47	4.43
NDX	5/23/1997	959.08	3.00	-0.02	-1.47	0.55
NDX	6/13/1997	964.40	1.00	1.76	-0.14	2.29
NDX	7/3/1997	986.52	1.00	2.95	8.56	10.02
NDX	10/10/1997	1,137.77	0.00	-5.51	-7.07	-10.38
NDX	7/10/1998	1,391.11	1.00	5.24	1.26	-1.00
NDX	12/11/1998	1,675.01	1.00	3.58	7.82	9.61
NDX	3/19/1999	2,053.69	1.00	0.66	4.50	8.71
NDX	7/9/1999	2,393.02	1.00	2.78	-3.80	-5.10
NDX	11/12/1999	2,888.91	1.00	4.84	7.88	9.81
NDX	2/4/2000	3,874.37	1.00	2.44	2.36	7.85
NDX	11/24/2006	1,815.53	0.00	-2.23	-1.61	-0.38
NDX	7/13/2007	2,032.16	1.00	0.18	-3.74	-5.59
NDX	10/5/2007	2,149.67	1.00	1.32	-0.86	2.09
NDX	10/26/2007	2,194.59	1.00	0.88	-7.30	-6.65
NDX	9/18/2009	1,725.24	1.00	0.37	0.37	0.37

Persistent Higher Highs Bullish in Short and Intermediate Term

Both the S&P and Nasdaq 100 chalked up their 10th consecutive higher highs today. It is natural and perhaps logical for one to think this market is overextended and that we should expect a pullback. But the markets do not often behave according to our 'logical' expectations. This may be good example. Indeed the market is overextended by various measures, however the data suggest that we should be cautious on the short side. There have been only 17 other instances where the S&P 500 has made 10 consecutive higher highs. In 14 cases (or 82.4% of the time) the market went on to post a higher close within 3 days. In the table below, i have also included the performance of the S&P 20 days later (column N20). Note that in 15 out of the 17 cases (or 88.2%) the market was trading higher, often comfortably so.

(Note: column '3Day+' displays the number of days it took the S&P to close higher within the next 3 days. a value of 0 indicates the market did not close lower within 3 days)

Ticker	Date/Time	Close	Streak	3Day+	%Chg N1	%Chg N2	%Chg N3	%Chg N20
SPX	9/15/1954	31.29	10.00	1.00	0.54	1.34	0.89	3.13
SPX	6/23/1955	40.75	10.00	1.00	0.52	0.59	0.05	5.52
SPX	7/8/1959	60.03	10.00	0.00	-0.10	-0.20	-1.03	0.45
SPX	6/9/1960	58.00	10.00	0.00	-0.05	-0.02	-0.16	-1.07
SPX	1/30/1961	61.97	10.00	3.00	-0.31	-0.11	0.53	2.37
SPX	8/1/1961	67.37	10.00	3.00	-0.64	-0.12	0.46	0.27
SPX	1/8/1964	76.00	10.00	1.00	0.37	0.32	0.29	0.99
SPX	1/18/1967	85.79	10.00	1.00	0.03	0.33	0.70	2.89
SPX	5/6/1969	104.86	10.00	2.00	-0.18	0.23	0.18	-2.16
SPX	12/4/1970	89.46	10.00	1.00	0.54	0.01	0.09	2.62
SPX	1/14/1976	97.13	10.00	3.00	-0.54	-0.13	1.23	3.75
SPX	4/13/1982	115.99	10.00	2.00	-0.14	0.31	0.71	2.96
SPX	5/14/1990	354.75	10.00	0.00	-0.13	-0.21	-0.08	3.24
SPX	9/13/1995	578.77	10.00	1.00	0.84	0.79	0.69	0.12
SPX	2/6/1996	646.33	10.00	1.00	0.56	1.51	1.55	0.88
SPX	3/2/1998	1,047.70	10.00	1.00	0.41	-0.04	-1.21	4.38
SPX	3/19/1998	1,089.74	10.00	1.00	0.86	0.53	1.46	3.03
SPX	9/17/2009	1,065.49	10.00	0.00	0.00	0.00	0.00	0.00

The same is true for the Nasdaq 100. There have been only 14 other instances where the Nasdaq 100 has made 10 consecutive higher highs. In all cases but one (or 92.9% of the time) the market went on to post a higher close within 3 days. In 10 out 14 cases (71.4%), it was trading higher 20 days later. That 71.4% rate is still significantly better than the 60.11% chance of the market closing higher 20 days later from any given day.

Ticker	Date/Time	Close	Streak	3Day+	%Chg N1	%Chg N2	%Chg N3	%Chg N20
NDX	2/13/1986	139.16	10.00	1.00	0.72	1.13	0.34	5.63
NDX	1/14/1987	162.66	10.00	1.00	0.91	-0.09	2.33	8.19
NDX	5/11/1987	189.24	10.00	2.00	-0.14	0.55	0.79	0.12
NDX	2/1/1991	234.45	10.00	1.00	1.03	3.03	5.37	8.07
NDX	6/3/1991	280.93	10.00	1.00	0.07	-1.27	-2.39	-7.76
NDX	1/7/1992	339.64	10.00	1.00	1.37	3.14	2.20	2.14
NDX	6/21/1995	535.52	10.00	1.00	1.97	1.71	0.18	2.77
NDX	9/20/1996	743.42	10.00	3.00	-1.35	-0.92	0.31	1.80
NDX	11/10/1999	2,797.61	10.00	1.00	1.87	3.26	2.80	13.22
NDX	8/25/2000	3,931.25	10.00	1.00	0.58	0.53	0.95	-7.86
NDX	8/21/2003	1,314.65	10.00	0.00	-0.77	-0.61	-0.43	5.90
NDX	1/9/2004	1,520.46	10.00	1.00	1.27	0.28	0.90	-1.94
NDX	5/24/2005	1,540.47	10.00	2.00	-0.50	0.54	0.61	-0.40
NDX	7/22/2009	1,565.00	10.00	1.00	2.33	2.18	2.19	2.02
NDX	9/17/2009	1,721.09	10.00	0.00	0.00	0.00	0.00	0.00

These studies suggest that any dips likely will turn out to be good short and interim term buys.

New Highs...

354 new 52 highs today. Nearest similar new high reading was Oct 11, 2007 - that also appeared to be the all time high on the S&P. I can't see any edge from this. If anything, the fact that we new highs are expanding as the market moves higher can be viewed as a positive for bulls. When we starting hitting around 500, that would be extreme and probably a warning that we are nearing a decent top.

RSI(2) closes above 98

Another short term sell was triggered today. S&P RSI(2) closed above 98. In the last decade, this has occurred 26 times. In 22 cases (or 84.6% of the time), the market closed lower than the trigger date within the next 3 days.

Ticker	Date/Time	Close	3Day-	%Chg N1	%Chg N2	%Chg N3
SPX	4/12/1999	1,358.63	1.00	-0.65	-2.22	-2.63
SPX	7/2/1999	1,391.22	1.00	-0.22	0.33	0.23
SPX	12/23/1999	1,458.34	1.00	-0.09	-0.05	0.35
SPX	12/31/1999	1,469.25	1.00	-0.95	-4.75	-4.57
SPX	7/14/2000	1,509.98	2.00	0.03	-1.08	-1.86
SPX	8/8/2000	1,482.80	1.00	-0.67	-1.52	-0.74
SPX	4/19/2001	1,253.69	1.00	-0.85	-2.34	-3.53
SPX	5/21/2001	1,312.83	1.00	-0.26	-1.81	-1.50
SPX	3/19/2003	874.02	3.00	0.19	2.49	-1.12
SPX	6/4/2003	986.24	3.00	0.40	0.15	-1.05
SPX	9/2/2003	1,021.99	3.00	0.42	0.59	-0.06
SPX	4/5/2004	1,150.57	1.00	-0.21	-0.87	-0.98
SPX	5/25/2004	1,113.05	0.00	0.17	0.74	0.69
SPX	11/3/2004	1,143.20	0.00	1.62	2.01	1.90
SPX	6/17/2005	1,216.96	1.00	-0.07	-0.28	-0.25
SPX	7/15/2005	1,227.92	1.00	-0.55	0.12	0.59
SPX	9/30/2005	1,228.81	1.00	-0.17	-1.17	-2.64
SPX	11/22/2005	1,261.23	3.00	0.35	0.56	-0.30
SPX	3/17/2006	1,307.25	1.00	-0.17	-0.77	-0.17
SPX	10/25/2006	1,382.22	2.00	0.50	-0.35	-0.31
SPX	4/10/2007	1,448.39	1.00	-0.66	-0.04	0.31
SPX	1/2/2009	931.80	1.00	-0.47	0.31	-2.70
SPX	5/4/2009	907.24	1.00	-0.38	1.35	0.02
SPX	7/16/2009	940.74	1.00	-0.04	1.10	1.47
SPX	7/20/2009	951.13	0.00	0.36	0.31	2.65
SPX	7/23/2009	976.29	0.00	0.30	0.60	0.34

So currently we have two short term sell signals on the board:

• Seven consecutive higher highs on S&P argues for a lower close than 1049.34 by Thursday (not very likely at this point)
• RSI(2) closes above 98 argues for a lower close than 1068.76 by Friday.

Persistent Higher Highs

The market continued to grind higher but with surprisingly good breadth. Breadth on came in at 2:1 positive for both advancing/declining issues and up/down volume. Today was the seventh consecutive day that the S&P made a higher high. In the last decade this as only occurred 16 times. In 15 cases (or 93.8%), the market was trading lower within 3 days. Note however, the next day performance is slightly negative.

Ticker	Date/Time	Close	3Day-	%Chg N1	%Chg N2	%Chg N3
SPX	4/13/1999	1,349.82	1.00	-1.58	-2.00	-2.28
SPX	7/17/2000	1,510.49	1.00	-1.11	-1.89	-0.99
SPX	8/9/2000	1,472.87	1.00	-0.86	-0.07	1.27
SPX	8/21/2000	1,499.48	1.00	-0.09	0.43	0.59
SPX	4/19/2001	1,253.69	1.00	-0.85	-2.34	-3.53
SPX	3/11/2002	1,168.26	1.00	-0.23	-1.21	-1.30
SPX	3/21/2003	895.79	1.00	-3.52	-2.35	-2.88
SPX	12/3/2003	1,064.73	2.00	0.47	-0.30	0.43
SPX	1/6/2004	1,123.67	3.00	0.24	0.73	-0.16
SPX	1/22/2004	1,143.94	1.00	-0.21	1.00	0.01
SPX	4/2/2004	1,141.81	3.00	0.77	0.56	-0.11
SPX	11/3/2004	1,143.20	0.00	1.62	2.01	1.90
SPX	3/16/2006	1,305.33	2.00	0.15	-0.02	-0.62
SPX	2/7/2007	1,450.02	1.00	-0.12	-0.82	-1.15
SPX	7/6/2007	1,530.44	2.00	0.09	-1.33	-0.76
SPX	3/18/2009	794.35	1.00	-1.30	-3.25	3.60
SPX	9/14/2009	1,049.34	0.00	0.00	0.00	0.00

Higher Close after Clean Gap Up - Short term negative

[this was suppose to be posted last night, but apparently remained as 'draft' and was never published. *sigh*]
The markets today complied with the expected behavior from yesterday's high probability study. Today's higher close on the S&P followed a 'clean' gap up from yesterday. By 'clean' i mean the close yesterday painted a low that was higher than previous day's high. This has only occurred 10 times since 1990. while not statistically significant, it is notable that in each case, the market was trading lower within three days.

Ticker	Date/Time	Close	3Day-	%Chg N1	%Chg N2	%Chg N3
SPX	10/2/1990	315.21	1.00	-1.21	-0.80	-1.18
SPX	6/15/1992	410.29	1.00	-0.48	-1.96	-2.27
SPX	10/18/1996	710.82	1.00	-0.14	-0.60	-0.50
SPX	9/27/2007	1,531.38	1.00	-0.30	1.02	1.00
SPX	11/29/2007	1,469.72	3.00	0.78	0.18	-0.47
SPX	12/24/2007	1,496.45	2.00	0.08	-1.35	-1.20
SPX	4/3/2009	842.50	1.00	-0.83	-3.20	-2.06
SPX	4/13/2009	858.73	1.00	-2.01	-0.78	0.77
SPX	6/2/2009	944.74	1.00	-1.37	-0.24	-0.49
SPX	7/16/2009	940.74	1.00	-0.04	1.10	1.47
SPX	9/9/2009	1,033.37	0.00	0.00	0.00	0.0

TRIN Signals Short Term Buy

I have not posted for a few days because really, not much as changed since. Generally i have remained on the bullish side of the my trades. Today however, there is an interesting high probability study to share.

The S&P closed up 0.88% today while oddly, the Arms-Index (TRIN) closed at 1.58. I looked back for instances where the S&P closed positive and the TRIN closed above 1.5. There were 24 prior instances. In 22 cases ( or 92% of the time), the S&P closed higher with 3 days. In 19 cases (or 79% of the time), the S&P closed higher with 2 days. Both of these are significantly higher than the odds of the S&P closing higher on any given 2 or 3 day period, which is 54% and 55% respectively.

(Note: column '3Day+' displays the number of days it took the S&P to close higher within the next 3 days. a value of 0 indicates the market did not close lower within 3 days)

Ticker	Date/Time	Close	Trin	3Day+	%Chg N1	%Chg N2	%Chg N3
SPX	2/25/1952	23.23	1.52	3.00	-0.34	-0.22	0.26
SPX	12/31/1953	24.81	1.78	1.00	0.56	1.17	1.33
SPX	10/10/1962	57.24	1.58	3.00	-0.33	-0.51	0.05
SPX	8/31/1966	77.10	1.79	1.00	0.78	0.42	-0.18
SPX	9/13/1966	78.32	1.53	1.00	1.03	2.25	2.13
SPX	10/11/1966	74.91	2.07	1.00	2.84	2.64	2.26
SPX	7/10/1970	74.45	1.51	1.00	0.13	-0.04	1.05
SPX	8/16/1971	98.76	1.52	1.00	1.25	-0.16	-0.61
SPX	6/7/1974	92.55	1.74	1.00	0.59	-0.29	-0.53
SPX	7/18/1974	83.78	1.67	2.00	-0.29	0.04	1.04
SPX	1/3/1975	70.71	1.78	1.00	0.51	0.44	-0.95
SPX	1/28/1975	76.03	1.56	1.00	1.62	0.24	1.25
SPX	7/9/1986	242.82	1.51	1.00	0.08	-0.25	-1.94
SPX	1/14/1988	245.88	1.68	1.00	2.51	2.44	1.40
SPX	8/24/1998	1,088.14	2.73	1.00	0.43	-0.36	-4.19
SPX	9/18/1998	1,020.09	1.66	1.00	0.37	0.94	4.51
SPX	6/28/2000	1,454.82	1.60	3.00	-0.85	-0.02	1.01
SPX	1/3/2002	1,165.27	1.51	1.00	0.62	-0.03	-0.39
SPX	5/20/2004	1,089.19	1.77	1.00	0.40	0.57	2.19
SPX	11/10/2006	1,380.90	1.54	1.00	0.25	0.89	1.13
SPX	3/4/2009	712.87	1.52	0.00	-4.25	-4.14	-5.10
SPX	7/1/2009	923.33	1.56	0.00	-2.91	-2.67	-4.58
SPX	7/21/2009	954.58	1.67	2.00	-0.05	2.27	2.59
SPX	7/30/2009	986.75	1.63	1.00	0.07	1.61	1.92
SPX	9/8/2009	1,025.39	1.58	0.00	0.00	0.00	0.00