Wednesday, October 28, 2009

Based On This Setup SPY Has Always Bounced In The Past

I’ve shown before how a deceleration in selling often suggests a bullish edge. A study from the Quantifinder last night illustrated this concept. It first appeared in the June 18, 2009 blog. I’ve updated the results below.



Most impressive about this one is the 100% consistency of the bounce. That’s an impressive feat with a sample size so ample.

4 comments:

ronmkraft said...

Rob, How are you measuring "Rate of Decline"?

SJG said...

By what metric can you say that the rate of decline decreased the last two days?

Woodshedder said...

SJG, pretty simple really.

Calculate the 1 day Rate of Change for 3 days back, 2 days back, and yesterday.

The 1 day ROC of 2 days ago should be less than the 3 days ago, and the 1 day ROC yesterday should be less than 2 days ago.

I have no idea how Rob is measuring it, but this would be one way to do it.

By the way, great study Rob!

Rob Hanna said...

Wood,

Thanks for taking this question for me. You're right. Friday the 23rd SPY dropped 1.14%, Monday the 26th it dropped 1.08% and Tuesday it dropped 0.46%.

Thursday gave us the profitable close, but Wednesday and Friday made this one treacherous. Certainly not acting "typical" compared to most other instances.

Rob