What should we make of the last seven market days? Below is an Open-High-Low-Close for $SPY from April 3rd (April 2nd was the 52 week high) through today. This chart looks different than an OHLC chart of the S&P 500 as $SPY opens up where futures leave off. This also integrates well with the Accumulation/Distribution (A-D) stats also on the chart.
I’d like to point out several aspects. Five out of the last seven days are green bars (i.e. higher closes than where $SPY opened) as compared with 5 out of 7 lower closes for the S&P 500. In other words, futures and overseas markets are significant contributors to the recent deterioration in equities. That’s not much of a revelation but compare this period with that of April 10th through April 20th, where a larger percentage of the movement came during regular trading hours. Although $SPY closed out that earlier period nearly flat, both A-D lines trended down. Over the last seven days, $SPY is off more than 3%, but the cumulative A-D is flat and the 20 day A-D moving average is rising. Probably the most interesting trend on this chart is that $SPY is off more than 4% from its April highs, yet share distribution is minimal.
Does the divergence between $SPY pricing and A-D trends indicate equities are going higher? Possibly. There certainly is a divergence and equity markets have rebounded strongly intraday over the past two days. We’ll see if actual accumulation can occur when equity futures stop falling off a cliff before regular trading hours.