After a lower open, the market (SPY) almost immediately went straight up for a gain of +1.95% on the day. Breadth was once again heavily lopsided with NYSE Advancing Issues/Declining Issues at 3.80 and NYSE Advancing Volume/Declining Volume at 6.91. This will once again triggers the (regularly negative, but at least with an limited upside potential) setup which was already triggered on Thursday's session last week (see my posting Follow-up on Trading the Odds on Friday - April 17, 2009).

Since 10/01/2007 there were 31 occurrences when the ratio of NYSE Advancing Issues/Declining Issues closed above 3.5 and NYSE Advancing Volume/Declining Volume closed above 6.0 on the same day.The following table shows the SPY' behavior and the respective performance over the course of the then following 10 sessions concerning those 31 occurrences since 10/01/2007 which fulfilled the setup mentioned above (notable is the significantly below-average profit factor and the negative win/loss ratio over the course of the at least following 3 sessions):

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On top of that the SPY closed higher on lower volume. Unfortunately (for the bullish case) that is a regular pattern these days, that means it is the 5th higher close on lower volume (than the previous day's volume) during the last 10 sessions. Since 10/01/2007 there were 46 occurrences when the SPY posted at least 4 higher closes on lower volume during the last 10 trading days. The following table (Table II) shows the SPY' behavior and the respective performance over the course of the then following 10 sessions concerning those 46 occurrences since 10/01/2007 which fulfilled the setup mentioned above (notable is the significantly below-average profit factor and the negative win/loss ratio over the course of the at least following 7 sessions):

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The following table (Table III) shows the SPY' behavior and the respective performance on the next session (including open, high, low and close) and 5 sessions later concerning those 46 occurrences since 10/01/2007 which fulfilled the setup mentioned above. It is especially notable that the SPY is regularly trading (significantly) lower 5 sessions later (on only 3 out of 44 instances -2 outcomes are still open- was the SPY able to close up +1.0% or more 5 sessions later). but not least speculative interest is running very high today. The 2-day SMA (Simple Moving Average) of Nasdaq Volume/NYSE Volume closed above 160%, its highest reading since 01/09/2009 (Nasdaq stocks are preferred by small traders/investors) . Since 10/01/2007 there were 31 occurrences when the 2-day SMA (Simple Moving Average) of Nasdaq Volume/NYSE Volume closed at a one month high. The following table (Table IV) shows the SPY' behavior and the respective performance over the course of the then following 10 sessions concerning those 31 occurrences since 10/01/2007 which fulfilled the setup mentioned above (notable is the significantly below-average profit factor and the negative win/loss ratio over the course of the at least following 3 sessions):

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Bottom line:

1. Heavily lopsided breadth session (on the up and downside) become a regular pattern these days, but not always to the advantage (not the bullish case) of the market. Today's session once again closed with a 'relatively small gain' in comparison to those sessions in the past which saw comparable, heavily lopsided breadth stats (Table I).
2. The same applies to the regularly anemic NYSE and SPY volume these days. During the last 12 session SPY volume closed above the 300mio. mark only once, while between 02/17/2009 and 04/02/2009 SPY volume NEVER closed below the 300mio. mark. And 4 or more session with a higher close on lower volume than the previous day's volume tilt the odds in favor of lower quotes (and closes) ahead. Odds (profit factor as the sum of all profits divided by the sum of all losses going long on close of the session when the setup was triggered) and the true chances that the event -a lower close x days later- will occur are tilt in favor of a bearish bias (Table II) concerning the next session(s).
3. And last but not least speculative interest is currently running very high, with the 2-day SMA (Simple Moving Average) of Nasdaq Volume/NYSE Volume running at its highest reading since 01/09/2009 which doesn't bode well for the market's short term outlook as well (Table IV).