In the recent market, successful swing trading has pretty much amounted to the fading of marketplace swings, especially the fading of strength. Since 2007 (N = 524 trading days), the average three-day alter inwards the S&P 500 Index (SPY) later a positive three-day catamenia has been -.44% (122 up, 143 down). After a negative three-day period, the side yesteryear side 3 days inwards SPY convey averaged a dip of exclusively -.08% (144 up, 115 down).
Indeed, if nosotros convey made a 3 twenty-four hours closing high inwards SPY, the side yesteryear side 3 days convey averaged a loss of -.64% (92 up, 107 down); across all other occasions, the average three-day alter has been -.03% (174 up, 151 down).
When novel 20-day highs across the NYSE, NASDAQ, as well as ASE convey exceeded 1000, the side yesteryear side 3 days inwards SPY convey averaged a loss of -.67% (59 up, 87 down). Across all other occasions, the average three-day alter inwards SPY has been only -.10% (207 up, 171 down).
What this tells us is that much of the marketplace weakness during the comport catamenia has occurred next periods of strength. Selling on forcefulness has provided far amend returns than selling on weakness. The implications for executing merchandise ideas are significant.
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