Thursday, May 26, 2011

Wednesday's Reversal Bar Suggesting An Upside Edge

On Wednesday SPY made a 20-day low before reversing to close higher. During long-term uptrends these kind of reversals have typically shown an upside edge. Below is a study from last night’s subscriber letter that demonstrates this.

These results appear strongly suggestive of an upside edge. Below is an equity curve using a 5-day exit so that you may see how the edge has played out over time.

The consistent returns make the equity curve appealing and provide me greater confidence in the results.

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