Wednesday, March 20, 2013

A Fed Day Setup That Has Seen SPX Higher 3 Days Later Every Time Since 1982

Tuesday’s decline was the 3rd down day in a row.  Many people are now aware that Fed Days have historically had a bullish tilt.  So 3-day selloffs leading up to Fed Days have been quite rare.  But they have also been a very bullish setup.  The table below shows the hypothetical results of buying at the close on the day before a Fed Day if it was at least the 3rd consecutive lower close.  The exit is 3 days later.

All of the 15 instances saw the market higher 3 days later.  These are some very encouraging numbers for the bulls.  I do have a concern here.  There has only been 1 instance in nearly 15 years.  And that took place in 2005.  The setup has certainly been potent over a long period of time.  But I am much less enthused about it than I would be if all these instances would have taken place over the last 10 years.  Still, with an undefeated record I think it is worth consideration.

1 comment:

HAOQI said...

The time background means: only when in a bull market will it happen.