The S&P 500 futures started the week with a 1.0% decline on Monday, and then rebounded on Tuesday with a 'very big' 2.9% gain to close at 1,481.05. Last Wednesday we had a 2.9% decline that was 'very big'. Are these swings good for the S&Ps in November?
One day the bull is the king and the next day the bear is the king. Can they both live in the kingdom and be happy? I don't see it; in the end one will win the power battle. These swings in the S&P are similar to years that have stung the bull in the past 1929, 1987 and 2002. This similarity supports the idea that the bear is not going in to hibernation this winter.
What affect have big back to back, opposite direction moves in November had on the S&P 500 in past?
Q: What is the historical performance of the S&P 500 Index over the next 10 trading days when in November it is up more than 2.0% the day after falling more than 0.7%, omitting any repeat occurrences within 10 trading days?
A: According to the 12 previous occurrences of this event, EventEdge indicates that S&Ps has shown a very strong bearish edge that peaks eight trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the most recent occurrence of the event, (Tuesday, Nov. 13, 2007) is Monday, Nov. 26, 2007.
S&Ps decline in 92% of the cases (11 of 12) by an average of 3.3% relative to the close on the event date. The average of the one rally is 0.3%. The overall return of the 12 cases is -3.0%, which, based on the close of the S&P 500 on the event date (1481.05), provides a target price of 1436.62 on Monday, Nov. 26, 2007.
If you would like to see more details of this historical edge, go to www.markethistory.com
Travis Nadelhoffer is an analyst with MarketHistory.com and an account representative with Logical Information Machines.
