Friday, March 2, 2012


A Remarkable Run

From a number of different perspectives, the market environment we're in now is remarkable.

At various points in the past six weeks, the broader market has shrugged off bouts of extreme sentiment, negative seasonality, egregiously negative breadth divergences and a host of negative price patterns.

This stretch is similar to several others we've seen since the 2009 bear market low.

If we levitate again tomorrow, then the S&P 500 will have enjoyed 50 consecutive days without closing below its 20-day moving average.

In April 2010 the streak lasted 49 days.

In November 2010 the streak lasted 52 days.

In January/February 2011 the streak lasted 40 days, but there was only 1 close below the 20-day. Ignoring that, the streak lasted 57 days.

So we're bumping up against the max number of days buyers were able to sustain the streak.

In addition, as of Tuesday the S&P had managed to eek out 35 positive closes during the past 50 days. The index also reached 35 positive out of 50 trading days on 01/11/10, 4/19/10 and 2/10/11, indicated by the red arrows in the chart to the right.

The last two also coincided with long streaks above the 20-day average as noted above. All three of them saw the market top out almost immediately.

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