A friend writes:
The QQQQ have had a 4% drop from the previous day’s high 259 times in the last five years. The next day, 142 were up, and the average was up by .3%. And if they were down 4 days in a row with the fourth down big — 15 out of 24 were up for an average of .9%.
I find these analyses to be somewhat problematic. One of the problems with this sort of quantitative analysis is the issue of single versus multiple variables.
It’s tempting to find correlations when reviewing these numbers and assume a causative relationship. However, the complex systems (such as the stock market) tend to have many more variables at work simultaneously. One would have to control for many more variables to have a high degree of conifdence in the correlation of these stats.
A 4% drop in the Qs is but one factor; I would want to add a few additional data points: In addition, I would control the 4% "drop" for market performance over the prior 90 days, the advance/decline line, 52 week hi/los, and a variety of sentiment factors.
The nature of complex, nonlinear systems, sensitive to initial conditions is that single variables rarely provide much insight.
That’s why I am always long chaos . . .
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.