Wednesday, December 14, 2005

Selling On an Up Day

The S&P 500 was up Tuesday by over .4%, but my Adjusted NYSE TICK showed greater selling on the day than buying (i.e., more stocks trading on downticks than upticks). This typically occurs when the buying is stronger in the large caps than the rest of the stock universe. It is also not common. Since July, 2003 (N = 609 trading days), it's only occurred 22 times.

Overall, the three-day average change for the sample is .12% (360 occasions up, 249 down). After an up day with net selling, however, the next three days bring an average loss of -.06% (9 occasions up, 13 down). This is one of the reasons why, despite pushing toward new highs, I am not aggressively bullish on this market. Another reason: We registered the highest number of stocks trading in intermediate-term downtrends since November 17th--despite it being an up day, with averages near recent highs.