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.
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6 comments:

  1. AnonymousMay 14, 2009 at 8:47 AM

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

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  2. Rob HannaMay 14, 2009 at 9:17 AM

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

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  3. yessirMay 14, 2009 at 2:36 PM

    many thanks for the update

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  4. DouglasMay 14, 2009 at 4:40 PM

    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.

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  5. alysomjiMay 14, 2009 at 8:10 PM

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

    Back down we go

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  6. Artem DmytrenkoMay 15, 2009 at 12:39 PM

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

    ReplyDelete