Monday, April 7, 2008


After shooting up 3.5% last Tuesday the S&P 500 has flat-lined. The chart might make you think there was a takeover announced last Tuesday morning of all 500 components. Volume has dropped each day as well.

I looked back over the last 30 years for similar price action. The only other time the market followed a gain of 3% or more with 3 consecutive closes within 0.25% of the close of the 3% day was December 3, 1982. By lowering the requirement of the surge day from 3% to 0.75% I was able to get a larger sample size. A summary of those instances is in the table below.

One day out falls basically in line with random. Two to three days out there appears to be a slight upside edge when this occurs.

Below are the results if you eliminate the surge day all together and just require the coiling action to occur above the 10-day moving average.

Again, slightly better than random over the 1st three days. Nothing to exciting here, but another small hint at higher prices.

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