After closing lower on seven consecutive sessions, with the (ratio) 'adjusted' McClellan Oscillator (20.00% trend, 4% trend) hitting a near record-low on Wednesday, November 23 (see The McClellan Oscillator (Adjusted) ), major market indices finally bounced back today, leaving an unfilled gap up (intraday low greater than the previous session's high) of 0.95%.

There have been thirteen occurrences since 1990 with SPY leaving an unfilled gap up of 0.95%+ (see stats below). Ten led ot a lower close three sessions later.

In addition: The ratio of NYSE volume associated with advancing issues vs. volume associated with declining issues hit a near-record high today (~40 : 1). Since 1990, there've been three other sessions only where the ratio came in at an even higher level: 03/23/2009, 06/10/2010 and 08/11/2011.

But bouncing back from oversold levels in conjunction with spikes in market breadth had short-term negative implications in the past (although the number of occurrences is too small to read anything statistically significant into it, but at least something to keep in mind). Table II below shows the SPY's performance over the course of the then following five sessions in the event the 2-day RSI (Wilder's Relative Strength Index) closed below 5, immediately followed by a session where the ratio of NYSE volume associated with advancing issues vs. volume associated with declining issues exceeded 7.5 .

Up to now, the SPY closed lower the next day (in this event on Tuesday, November 29) on all of those 8 occurrences, and two and three sessions later still on 7 out of 8 occurrences (thereof closing lower 1.0%+ on 5 and 6 sessions respectively).

Conclusion(s): With leaving a gap up ≥ 0.95% and bouncing back from oversold levels in conjunction with spikes in market breadth, probabilities and odds are tilt in favor of s short-term consolidation of today's gains.

Have a profitable week,

Disclosure: No position in the securities mentioned in this post at time of writing.