Odds Favor Lower Prices for S&P

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Odds Favor Lower Prices for S&P

Posted at 8:04pm ET on 01/28/15 – S&P futures are trading +5.50 points above the 01/28/15 low

S&P futures lost -2.2% today, which is the largest single-day drop since 10/09/14 (-2.3%).  This push downward is sure to have aggressive swing traders getting long for a bounce.  If you find yourself wanting to get long here, consider the following:

  • S&P sentiment decreased from 20% to 9% Bulls on 01/28/15
  • Since 2006, S&P decreased >9% Bulls while closing <11% Bulls seven other times
  • Dates: 07/13/06, 09/29/08, 10/15/08, 08/04/11, 08/18/11, 05/30/12, 10/10/14
  • S&P futures made a lower low 100% of the time (7/7) the next trading day
  • S&P futures made a lower close 100% of the time (7/7) within seven trading days

As a matter of fact, S&P futures tend to extend those losses well below the most recent close.  Here are some additional stats on those previous dates:

  • The median decline bottomed -6.6% from the most recent close
  • The average decline bottomed -11.0% from the most recent close
  • The shallowest decline was -1.4% from the most recent close (07/13/06)
  • The deepest decline was -28.7% from the most recent close (09/29/08)

Even though S&P traded sharply lower today, the sentiment data suggest we should see new lows over the coming days.  Furthermore, odds favor an extended move below today’s closing price.  A decline of -6.6% from today’s close would put S&P futures at 1861.00.

To see how we’re trading this move, try a free two-week trial of our Futures Trading Service.

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