Indicator of the Week: 200 Days Above the 200-Day
By Rocky White, Senior Quantitative Analyst
Foreword: A milestone was hit last week on the S&P 500 Index (SPX). It has been 200 trading days since the S&P 500 last closed below its 200-day moving average. The chart below marks the dates since 2007 in which that milestone was reached. The last two times it happened, a sharp pullback ensued. However, the market quickly rebounded both times. The time before that was mid-2007, which was right before the market crashed. This week I'll look at occurrences over the past 40 years to see how the market typically behaves going forward, and see if we can gain any insight into what to expect from this point.
Past Occurrences: The first table below shows the returns for the SPX once it has been above its 200-day moving average for 200 straight days. The second table shows typical returns for the index. This data reveals that the index does seem to underperform somewhat after such a lengthy streak above its 200-day moving average. The returns don't look catastrophic, but it does seem to be a point at which the index takes a breather from its uptrend.
Here's a table showing the individual dates when the index made it 200 days above the 200-day moving average. The longest streak on record was in 1997, when the index went 525 straight days without a close below this trendline. We are currently in the fifth streak of this length since 2000. In the previous four occurrences, the index was down over the next three months. Hopefully we break that trend.
Individual Stocks: So which individual stocks in the S&P 500 have been above their 200-day moving averages the longest? The list below shows stocks maintaining streaks at least twice that of the index (in other words, 400 days or more). Credit card companies Mastercard (MA) and Visa (V) top the list. Both stocks have more than doubled in value during the streak, as well.
This Week's Key Events: Retail Sales on Deck
Schaeffer's Editorial Staff
Here is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.
And now a sector of note...
While we continue to like the leisure sector as discussed in recent weeks, we have become increasingly wary of gold. If looking for a point at which to put on a short trade, now could be a good opportunity. Despite recent claims in the press that the yellow metal is back in fashion, we remain unconvinced. On the charts, the SPDR Gold Trust (ETF) (GLD) is sitting just below an area of multi-layered resistance. A 20% pop above its year-to-date closing low of $115.94 on June 27 is $139.13, which is also near the site of the ETF's 140-day moving average. GLD recently endured a massive rejection at this trendline, which proved to be very significant during gold's rally from 2009-2011. Additionally, in the options pits, buy-to-open volume remains low on GLD options. This fact makes the recent "rally" even more suspect, as strong option volume in the ETF has previously been consistent with positive price action. Finally, although just 7% of the 30 precious-metal names we track are perched above their respective 200-day moving averages, nearly half of all analysts' ratings are on the "buy" side.
Recent XIV Action May Bode Well for Bulls
Featured Partners: AOL DailyFinance
© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: email@example.com
All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.