Earlier this year, we took an in depth look at our Strong Close and Weak Close Indicators (details here). An updated look at those charts reveals the number of strong closes for the S&P 500 has continued to decline since the beginning of the year and is currently at levels not seen since 2012:
The Weak Close Indicator hit a multi-year high (note that the left axis is inverted) in June and has moderated somewhat since then, but remains relatively high:
As we noted, there is a fairly strong relationship between the strength (or lack thereof) in market closes and the Fed’s asset purchases. Given that the number of weak closes tends to increase without that support for asset prices, the deterioration in market follow-through is not all that surprising:
