Friday, August 21, 2009

Three strong up days...

Although we look like we may be ready for another pause here, the stats seem to indicate differently. The S&P has closed up 3 consecutive days now, with more than 1% gain in two of those days

In the past decade, when the S&P has been trading above it's 200MA and closed up for 3 consecutive days with a gain of more than .5%, it has a tendency to close higher within the next 3 days. There have been 17 prior setups. In 13 of the 17 cases, the S&P was trading higher within the next 3 days. The catch here however, is that half of those trades occurred during the bull run of of 1999/2000.

Testing this scenario from 1950 to present still produces impressive results. Of 123 trades, 94 (or 76.42%) closed higher within 3 days.

However, i tend to weigh recent history more, and there the restuls are not as impressive. There were 8 such setups, and in 5 cases, the s&P closed higher with 3 days.


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