Broad Strength: What Next?

Intermediate-term new highs were very strong on Friday, with 2132 new 20-day highs and 1231 new 65-day highs. Since January, 2003 (N = 743), we've had 30 days where new 20-day highs were greater than 2000 and new 65-day highs were above 1000. Three days later in SPY, the market was up 15 times, down 15 for an average loss of .00%. This compares unfavorably with the average gain of .15% (421 up, 292 down) for the remainder of the sample. This relative weakness is not present 10 days out.

In short, after very broad strength, the market more often than not has consolidated over the next three days before resuming its upward course.