The major indexes such as the SPDR Trust (NYSE:SPY), Diamonds Trust (NYSE:DIA), Powershares QQQQ Trust (Nasdaq:QQQQ), and the IShares Russell 2000 Index (NYSE:IWM) have all had a high volume reversal on Friday February 5th 2010. This reversal took place in the final hour of the trading session and must be respected when looking out into next week.
There is something else that is also stands out about last Friday. It was the fourth negative week for the major indexes. The last time the stock market was down four weeks in a row was when the market made a short term top on June 11th and bottomed around July 8th before staging another rally. From this June 2009 high the point decline on the S&P 500 pullback to the low in July 2009 was around 87 points. This time the S&P 500 looks to have made a top in January 2010, and if a short term low was made on February 5th, 2010 which is 4 weeks in time the decline from high to close is about 84 points. While this decline it is not exact, the markets remain very symmetrical and often do.
The SPDR Gold Shares (NYSE:GLD) is another index that displays symmetry from the recent past. In February 2009 the GLD pulled back 9 weeks into mid April 2009. The decline for this ETF was about 14 points. Before the end of November 2009 the GLD made a recent top at just under 120.00 a share. Since that high, the GLD has pulled back 10 weeks now for a decline of 14.86 points as of the close on February 5th, 2010. While the point decline is not perfect it is important to notice the symmetry in time and price.
While there is no evidence yet of these lows in the markets holding up for the long term. However, they often do so at least in the short term. In many ancient texts there is saying, “as above so below.” Perhaps this is some evidence to the wisdom of the past. In any case watch those big reversal days.
Nicholas Santiago
Chief Market Strategist
IntheMoneyStocks.com
