Interesting data point from Jason Goephert, Sentiment Trader:

There have been 9 other times the S&P 500 tracking fund, SPY, hit a three-month low, then the next day opened for trading at least +0.5% above the previous day’s high and closed at least +0.5% above the open.  7 of the 9 led to gains over the next three weeks. The two failures were both in the summer of 2002.  Overall, it was a good multi-week kick-off signal.

Then there is this from Merrill’s Market Analysis research team:

 A 90% up day is bullish on average 10 to 65 days out

Yesterday’s (Nov 19) 2.0% rally in the S&P 500 was confirmed by a 90% up day on the NYSE. Since January 2006, there have been 62 90% up days out of a total of 1733 trading days – 90% up days have occurred only 3.6% of the time. After a 90% up day, the S&P 500 has below average 1, 2, and 5-day price returns and well above average 10, 20, 30, and 65-day returns.

I am not sure what this means going forward, but they are the other side of my view.


Category: Contrary Indicators, Markets, Technical Analysis

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.

5 Responses to “S&P500 vs 3 Month Lows; 90% Up Days”

  1. rfprince says:

    post hoc analysis, data mining, call it what you will. It is the equivalent of firing at a wall with a pistol, finding the hole in the wall, painting concentric circles around it, and calling it a bull’s eye.

  2. Bill Wilson says:

    This does seem like a perfect setup for a Santa Rally. Optimism over a fiscal cliff deal, continued QE, and a slightly oversold market. I am, of course, guessing.

  3. As I noted, they are the other side of the posture I have adopted.

    I am not a fan of Single Variable Analysis in Market Forecasts. Nor do I like “9″ as a data set from which to to draw broad conclusions.

  4. 4whatitsworth says:

    I am going to visit my fortune teller and ask the following..

    1) Where will new jobs come from to support the expansion in housing?
    2) If the answer is I don’t know the next question will be why not that is your job?
    3) If the “why not” is something I already know I suppose I will ask for my money back and the struggle will begin.

    Tea leaves..

  5. courageandmoney says:

    Seasonality, End of the year election cycle, Plus throw in a 10% pullback….If things settle down over the next few days with a follow through day…look out above. The technical world (50% of market) will be buying hand over fist. Just enough for you to doubt your posture…….:)