• 288 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 290 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 690 days Could Crypto Overtake Traditional Investment?
  • 695 days Americans Still Quitting Jobs At Record Pace
  • 697 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 700 days Is The Dollar Too Strong?
  • 700 days Big Tech Disappoints Investors on Earnings Calls
  • 701 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 703 days China Is Quietly Trying To Distance Itself From Russia
  • 703 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 707 days Crypto Investors Won Big In 2021
  • 707 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 708 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 710 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 711 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 714 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 715 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 715 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 717 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Trade In Counterfeit Goods Hits Half A Trillion Dollars

Trade In Counterfeit Goods Hits Half A Trillion Dollars

The counterfeit market has breached…

Frank Hogelucht

Frank Hogelucht

Individual investor, trading for a living since 2007, taking a statistical approach in combination with historical market data and addicted to developing market-neutral algorithmic trading…

Contact Author

  1. Home
  2. Markets
  3. Other

Short-term Extended to the Upside

Fully compliant to historical probabilities and odds (see my last posting: The Trend is Your Friend ... ), major market indices resumed their uptrend after two fractionally lower closes at the end of the last week, the 6th consecutive session now with a higher open, a higher high and a higher low above the previous session's open, high and low respectively.

But with an opening quotation not lower than -0.30% below the previous session's high on the 6th consecutive session as well, the SPY (S&P 500 SPDR) appears a bit extended to the upside suggesting a near-term correction/consolidation ahead.

Table I below shows all occurrences (since 1990) and the SPY (S&P 500 SPDR) performance on the then following session (in this event on Tuesday, December 6) in the event the SPY did not open worse than -0.30% below (or above) the previous session's high on six consecutive sessions in the past. The SPY was regularly trading in a tight range the next day, with only one out of twenty-six instances leading to an outside ±1.0% move, and a mean and median return close to zero. But on two out of every three occurrences, the short-term trend was down, and the SPY never gained more than +0.53% on the close.

all occurrences (since 1990) and the SPY (S&P 500 SPDR)

But there is some good news as well, even unexpectedly. Contrary to someone's probable expectation, the market's inability to close above the open, even on a back-to-back session in the midst of a strong uptrend, is not a sign of weakness and potentially lower prices ahead, quite the opposite.

Table II below shows all occurrences (since 1990) and the SPY's (S&P 500 SPDR) performance over the course of the then following four session (and until the end of the week, in this event until Friday, December 9) in the event the SPY posted a higher high and a higher lower on three (or more) consecutive sessions, but closed below the open (a black 'candle') on the last two sessions.

The SPY does not only show a significantly positive bias and remained on firm path over the course of the next couple of sessions (posting a higher close two and three days later on 11 out of 14 occurrences), but did never loose 1.0%+ (two days w/ an exactly 1.0% loss) over the course of the then following four sessions on any of those occurrences listed below and/or over the remainder of the week (whatever came first), and posted at least one higher close one to three days later on all instances.

all occurrences (since 1990) and the SPY's (S&P 500 SPDR) performance


Conclusion(s)

The trend remains up, but a short-term consolidation on Tuesday, December 6 seems likey, while downside potential will probably be limited.

Have a profitable week,

 


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

 

Back to homepage

Leave a comment

Leave a comment