Thursday, May 14, 2009

Sharp Drop In 2 of 3 Days Revistited

The market dropped hard on Wednesday for the 2nd time in the last 3 days. Two hard selloffs in three days is something I looked at in July of last year. Below is an updated table of that same study.


The results seem to suggest the market is getting a bit overdone and could be ready for a bounce. While there have been a fair amount of occurences in the last 10 months, the results have stayed fairly consistent.

6 comments:

Anonymous said...

newbie question: what do you mean it's getting ready for a bounce? does bounce mean up or down?

Rob Hanna said...

Bounce means up. It is now short-term oversold and a move back up is becoming more likely.

Mr Trade said...

many thanks for the update

Douglas said...

I expected it to go up today based on Frank's work at Trading the Odds. It did. It seems to be in a downward channel (and now closer to the top of the channel) and there was a sharp decline today in implied volatility.

I expect the market to drop. I think we passed an intermediate top a few days ago. Having said that - I've been consistently wrong about predicting the top of this rally.

alysomji said...

Douglas, I think we hit the top on Friday or thereabouts

Back down we go

DmytrenkoAV said...

Thanks for this nice post. You + TraderFeed = cool combination :-)