SOX and NDX: Strong ST Buy

SOX
The SOX play discussed yesterday is still in play today. That play calls for a close higher 294.95 by Wednesday. However the SOX closed down again today for the 5th consecutive day. When we run the same study last night, but looking for 5 consecutive days, the results are rather impressive. There have been 15 previous instances, 14 of which closed higher within 3 days (or 93.33%).
(Note: Column '3Day+' indicates the number of days it took the SOX to close higher than the trigger date.)

Ticker						Date/Time				Close				3Day+				PChg N1						PChg N2					PChg N3
^SOXX						8/3/1995				261.97				1.00				1.16						1.33					2.15
^SOXX						9/26/1995				270.37				1.00				0.72						5.04					1.74
^SOXX						10/21/1996				192.30				2.00				-1.66						0.61					-1.44
^SOXX						4/15/1997				263.06				2.00				-0.72						1.59					0.05
^SOXX						8/12/1997				374.26				1.00				1.60						2.33					-0.07
^SOXX						4/28/1999				378.42				3.00				-1.64						-2.15					0.59
^SOXX						12/13/1999				631.04				0.00				-6.82						-4.04					-0.08
^SOXX						4/14/2000				892.16				1.00				13.19						17.98					13.53
^SOXX						5/23/2000				869.74				1.00				5.23						3.68					4.59
^SOXX						7/24/2000				1,075.29				1.00				2.70						-3.82					-11.66
^SOXX						6/25/2003				354.22				1.00				2.75						1.48					1.54
^SOXX						2/23/2005				424.02				1.00				2.39						4.64					3.12
^SOXX						3/9/2006				503.53				3.00				-0.24						-0.71					1.50
^SOXX						12/13/2006				467.01				1.00				1.86						1.89					2.02
^SOXX						5/18/2007				491.71				2.00				-0.17						0.27					-1.04
^SOXX						8/11/2009				290.74				0.00				0.00						0.00					0.00

NDX

Today the NDX closed at an 8 day low, while trading above it's 200MA. Historically that has been an ST positive occurrences. There have been 102 such cases. 83 times (81.4%) the NDX closed higher within 3 days.

SOX: Big move coming?

Review of last signal: We had a down day across the boards today, however as discussed last night here, the odds had favored a higher close on the BKX based on recent divergence with GS (as odd as those 'odds' sound). The BKX outperformed the market all day, but paired much of it's gain by EOD to close up barely in the green. Nonetheless, it was good enough to have successfully fulfill the setup discussed last night.

SOX Buy Signal:
Today the SOX closed down for the fourth straight day, painting 4 consecutive lower lows. I looked back over the past decade for similar occurrences, and added one more filter. I also looked for setups where the SOX was trading above it's 200MA.

The results: In the last decade, there were 43 occurrences. In 33 cases (77%) of the time, the market closed higher within three days for an average of +1.8%. Thus the odds favor a decent move for the SOX over the next 3 days.

A variation to this study would be to filter for when RSI(5) falls below 30, as was the case today. In this study, there were 17 occurrences in the last decade, with 15 (88%) closing higher within TWO days.