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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…

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Mission Impossible

The SPY (S&P 500 SPDR) gained another +0.37% on the close today, in line with historical probabilities and odds calling for at least one higher close during the remainder of the week ( see Bullish Setups and Seasonalities ... ), but it was not a session for the faint of heart.

The SPY has now posted a close above the previous session's low eight days in a row, at the same time (likewise eight days in a row) never down -0.10%+ on the close. Currently it seems like a mission impossible for the bears to keep the markets at the lows (despite the news), while buyers are still eager to buy every dip, which will probably remaining the prevailing theme for the time being.

I hate to sound like a broken record, but historically the pattern mentioned above and triggered at today's close had intermediate- and longer-term bullish implications in the past. Table I below shows all occurrences (since 1990) and the SPY's performance one, two, three and six months later, and over the remainder of the year in the event the SPY closed above the previous session's low eight days in a row (for the first time, no consecutive occurrences are accounted for), at the same time never down -0.10% on the close in the past.

The SPY closed at a higher level one, two and six months later on 15 out of 17 occurrences, up 1.0%+ on 13, and down 1.0%+ on 1 (and 2 respectively) occurrences only. There index posted at least one higher close during the then following month on all 17 occurrences, regularly (on 12 occurrences) between one and three sessions later. In addition, the SPY closed out the year with a gain (in comparison to the trigger day's close) on all but one occurrences (the first one in 1990).

SPY Chart


Conclusion(s)

The trend remains up, and I expect the SPY (S&P 500 SPDR) to post at least one higher close (again) over the course of the next couple of sessions (probably until Monday, December 12, at the latest).

Have a profitable week,

 


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

 

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