Assessing Market Action With Indicators And History
Monday, May 10, 2010
Monster Gaps Higher
As of now the market is gapping up very strongly on bailout news. SPY is up over 4% as I type. I looked back to find other instances of monster gaps and how the market behaved on those days. For this study I required the gap to be at least 3%. Results below.
Only 4 instances make it dangerous to draw any solid conclusions. I'll let readers do their own interpretations. I would note that all 4 instances took place in September or October of 2008.
In this blog I will be examining market action and quantifying my findings. Using sentiment, breadth, price and volume indicators - both standard and customized - I will try and uncover short-term edges which could be taken advantage of by market participants. I will frequently add opinion to these studies and may sometimes post opinions without quantifiable research behind them.
All content on this site is provided for informational purposes only. It is NOT a recommendation or advice to buy or sell any securities. I may hold positions for myself or clients in the securities or industries mentioned here. There is a very high degree of risk involved in trading securities. Your use of any information on this site is entirely at your own risk.
I have traded professionally since 2001. From January 2003 through February 2007 my bi-weekly column "Rob Hanna's Putting It All Together" appeared on TradingMarkets.com. I have been conducting quantitative research and designing trading systems - mostly focused on short-term edges since 2004.
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