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S&P Seven-Day Alternation Shows Tug of War

June 14 (Bloomberg) -- The Standard & Poor’s 500 Index posted the longest streak of alternating up and down days since October, a sign that stock bulls and bears are in a “tug of war,” according to Brown Brothers Harriman & Co.

The benchmark measure for U.S. equities hasn’t posted back-to-back gains or losses since June 6. The stretch of alternating up and down days matched the seven-day span that ended on Oct. 20, which was the longest since the eight-day streak in July, according to data compiled by Bloomberg.

The fluctuation came after a 9.9 percent decline from this year’s peak in April pushed the S&P 500 below its 200-day moving average for the first time since December. The index has since rebounded 4 percent from the June 1 low and stayed above its 200-day threshold for seven days.

“We are at the tug-of-war point here,” Ari Wald, a New York-based technical strategist at Brown Brothers, said in a telephone interview. “This is investor indecision as bulls and bears wage a war at this important support level. Neither bears nor bulls are taking control.”

Equities swung between gains and losses as optimism about further stimulus from central banks and concern over Europe’s debt crisis dominated the market. The S&P 500 rose 1.1 percent today, following yesterday’s 0.7 percent retreat, amid reports central banks may take steps to help economies battered by Europe’s debt crisis.

Investor ‘Confusion’

There is “lots of confusion,” Roger Volz, a technical strategist at BGC Partners LP in New York, wrote in an e-mail. Investors are “awaiting resolution and would go with the direction,” whenever a key support or resistance level is broken, he said.

Wald at Brown Brothers said current market conditions look similar to those a year ago, when a drop from an almost three-year high on April 29 took the S&P 500 close to its 200-day average in June. The initial rebound was followed by eight days of alternating gains and losses through July 21. The subsequent advance was then followed by a 17 slump through Aug. 8, data compiled by Bloomberg show.

Sentiment indicators have yet to show signs of extreme pessimism during the S&P 500’s retreat since April, suggesting there is room for bears to push the market lower, Wald said. A lack of pessimism is considered a contrarian indicator by some analysts who follow charts to make predictions, because investors who haven’t sold stocks may have the power to drive the market lower.

A measure of bearish sentiment tracked by Brown Brothers reached 42 percent, short of the 50 percent threshold that Wald considers bullish. It got as high as 63 percent in 2011 and 57 percent in 2010.

“I don’t think there is enough pessimism out there just yet,” Wald said.

To contact the reporters on this story: Lu Wang in New York at; Cecile Vannucci in Amsterdam at

To contact the editor responsible for this story: Nick Baker at

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