Kudos to Rennie at Market Tells for pointing out that today's stock marketplace position was weaker than Fri despite the ascent inward the reach of the large cap indexes. According to the information that I keep, which tracks all NYSE, NASDAQ, as well as ASE stocks, nosotros made fewer 20-day highs today than on Friday.
So what happens afterwards a weak upwards twenty-four hr menstruum inward the market? I went dorsum to belatedly 2002 (when I kickoff began collecting the 20-day high/low data) as well as looked at all cases inward which SPY unopen upwards on the day, simply fewer stocks than the twenty-four hr menstruum previous made fresh 20-day highs.
Three days afterwards the weak upwards day, SPY averaged a loss of -.25% (124 occurrences up, 133 down). For the residuum of the sample, SPY averaged a three-day attain of .07% (808 up, 638 down).
Interestingly, the weakness next a weak upwards twenty-four hr menstruum was to a greater extent than pronounced when the weak upwards twenty-four hr menstruum registered less than 500 novel lows (as was the illustration today). That seems to propose that a weak upwards twenty-four hr menstruum inward a relatively potent marketplace position is peculiarly vulnerable to reversal, every bit a longer-term deed may survive waning. The average iii twenty-four hr menstruum loss inward SPY when novel lows were depression was -.41% (55 up, 63 down). When novel lows were high, the average three-day loss was -.11% (69 up, seventy down).
It's a dainty illustration of how looking at toll alter lone tin laissez passer on the sack mislead traders.
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