Putting A Series Of Higher Highs Into Context

I’ve often spoke in the past of the importance of putting smaller patterns into proper context based on larger patterns or trends.  In Sunday night’s Gold & Silver Subscriber Letters I showed some studies that exemplified this concept nicely.

The studies looked at the possible impact of 5 consecutive days of SPY making an intraday high.  (This triggered at the close on Friday.)  I broke it down to see all times the 5 higher highs were accompanied by a 50-day high versus times they weren’t.  First let’s look at times where 5 higher highs occurred without a 50-day high.

Stats over the 1st few days suggest a possible downside edge.  After 5 higher highs the market will often need a breather.

But what of times (like Friday) when a strong uptrend exists and the market is also making a 50-day high?  Those stats can be found below.

Interestingly, the number of instances was exactly the same.  But with an intermediate-term rally also occurring the tendency to pull back no longer exists.  So 5 higher highs do not appear to suggest a bearish edge in situations like the one that set up a few days ago.