Friday, June 21, 2013

SPX Performance After Strong Drops Through The 50-Day Moving Average

Thursday’s big drop moved the SPX strongly down through its 50-day moving average.  And it did so with both breadth and volume providing exclamation marks.  Such breaks of highly public support lines like the 50-day moving average can be notable (and it certainly drew attention on Thursday).  Some traders may view it as a change in trend.  And while it may be when looking out over a period of days, weeks, or months, the immediate 1-day reaction to such moving average breaks has typically been to bounce.  This can be seen in the study below.

The 15 for 16 record is very impressive, and suggests a good chance of the market closing higher today.  The average instance gained about 0.6% on the day.


Benjamin said...

Hi there, really enjoyed your blog. Just one question about this study, has the market hold that low after the next day bounce?

Podoloski advani said...

This article is mind blowing I read it and enjoyed. I always find this type of article to learn and gather knowledge.

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