This would seem to suggest a downside edge for Tuesday. One caveat though is that prior to 2002 this downside edge was not evident. Another issue is that today's apparent gap down may mean much or all of the downside edge could have been realized overnight.
2 comments:
Another excellent post, Rob! Especially helpful was the reasoned analytical recap at the end: "...today's apparent gap down may mean much or all of the downside edge could have been realized overnight."
Putting that together w some early divergences in the first hour of trading helped guide us toward conservatively covering shorts near the open.
It's great the way you maintain critical thinking even toward your own conclusions.
Daniel
Hi Rob! I'm a regular follower of your blog and believe in the same concepts that you do.
Just 1 difference: Don't you think overall Market PE is very important?
I've observed that results are quite different when similar tests are run in the context of overall market PE.
So when you run a test "What happens when dow is 2% down & then up on low volumes", I think of 3 tests:
What happens when dow is 2% down & then up on low volumes, while market PE is above 19.
What happens when dow is 2% down & then up on low volumes, while market PE is below 13.
What happens when dow is 2% down & then up on low volumes, while market PE is between 13 and 19.
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