Bears who counted on a breakdown of a seeming head-and-shoulders designing (another eloquent reminder of the folly of believing that shapes on charts dictate global working capital alphabetic lineament flows) cause got been taken to the woodshed amongst a high momentum ascension inward stocks. Specifically, we've seen dorsum to dorsum potent days inward the Demand/Supply indicator, which tracks the proportion of stocks closing inward a higher house the volatility envelopes surrounding their short-term moving averages to those closing below their envelopes. Tuesday saw a close 10:1 ratio of Demand to Supply (upside momentum to downside momentum) together with Midweek was virtually 15:1.
When we've had dorsum to dorsum days of 5:1 (or greater) Demand to Supply going dorsum to September, 2002 (when I began archiving these data), the adjacent v days inward the S&P 500 Index (SPY) cause got averaged a considerable loss of -1.73% (6 up, 12 down). That is quite a fleck weaker than the average v twenty-four hours alter of .06% (928 up, 767 down) for the residual of the sample.
By the fourth dimension we've had consecutive high momentum days, it appears that--in the brusk run--the bulls are all inward together with we've tended to laissez passer on dorsum to a greater extent than or less of those gains. Indeed, afterwards a unmarried twenty-four hours of greater than 10:1 momentum, the adjacent 4 trading days cause got averaged a loss of -1.22% (10 up, 17 down). Chasing highs afterwards several days of strength, overall, has non been a winning strategy inward the brusk run.
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