After two down days to start the month, watch for this price pattern.

Tuesday, May 3rd, 2011 at 6:55pm  (Rennie Yang from Markettells.com)

The S&P500 has kicked off the month of May with two consecutive lower closes, the first string of back-to-back
down days to start the month since last July. An effective way to trade early month weakness is to simply wait for
the market to recoup that loss. If it can, at any point before the end of the month, it invariably leads to a tradable
rally. The table below illustrates this point. The first date shown is the second session of the month when the S&P
closed lower for the second day in a row. The second date is when the S&P closed back above the previous month’s
settlement and the number of sessions elapsed. For instance, using the most recent signal, the S&P closed lower
two consecutive sessions at the start of the month on 7/2/10. Two sessions later, on 7/7/10, the S&P erased that
loss by closing above the prior month’s close. That’s the trigger date, and you can see the S&P rose 3.3% over the
next five sessions…
SPX Starts Month w/ Two Down Days, Before End of Month S&P Closes > Prev Month’s Settlement
07/02/10… 07/07/10 (2)… S&P500 +3.3% one week later
10/02/09… 10/07/09 (3)… S&P500 +3.3% one week later
09/02/09… 09/08/09 (3)… S&P500 +2.7% one week later
03/03/09… 03/12/09 (7)… S&P500 +4.4% one week later
08/04/08… 08/05/08 (1)… S&P500 +0.4% one week later
06/03/08… 06/05/08 (2)… S&P500 -4.6% one week later (*)
12/04/07… 12/05/07 (1)… S&P500 +0.1% one week later
03/02/07… 03/20/07 (12)… S&P500 +1.3% one week later
11/02/06… 11/06/06 (2)… S&P500 +0.3% one week later
03/04/03… 03/17/03 (9)… S&P500 +0.2% one week later
08/02/02… 08/14/02 (8)… S&P500 +3.2% one week later
04/03/01… 04/10/01 (5)… S&P500 +6.0% one week later
11/02/99… 11/05/99 (3)… S&P500 +1.9% one week later
08/03/99… 08/16/99 (9)… S&P500 +2.2% one week later
03/02/99… 03/04/99 (2)… S&P500 +4.1% one week later
06/03/97… 06/06/97 (3)… S&P500 +4.1% one week later
03/02/95… 03/10/95 (6)… S&P500 +1.2% one week later
10/04/94… 10/11/94 (5)… S&P500 +0.4% one week later
01/05/93… 01/14/93 (7)… S&P500 -0.1% one week later
12/02/92… 12/04/92 (2)… S&P500 +0.4% one week later
10/02/92… 10/26/92 (16)… S&P500 +1.1% one week later
11/04/91… 11/07/91 (3)… S&P500 +0.9% one week later
01/03/91… 01/18/91 (11)… S&P500 +1.2% one week later
05/02/89… 05/12/89 (8)… S&P500 +2.4% one week later
02/02/89… 02/07/89 (3)… S&P500 -2.6% one week later (*)
12/02/88… 12/05/88 (1)… S&P500 +0.6% one week later
10/04/88… 10/06/88 (2)… S&P500 +1.0% one week later
08/04/87… 08/06/87 (2)… S&P500 +3.9% one week later
06/02/87… 06/03/87 (1)… S&P500 +1.4% one week later
05/02/86… 05/05/86 (1)… S&P500 -0.1% one week later
The S&P was higher one week later in 26 out of the last 30 occurrences, or 87% of the time, significantly above the
57% random chance for a higher S&P one week later. Average gain was 2%. This signal will be triggered anytime
in the month of May on an SPX close above 1363.61.