Today’s study utilizes a phenomenon that I have spoken of a number of times in the past. That is that when the market begins to get overbought it will often suggest a pullback is likely, but when overbought gets powered through then odds will sometimes shift from a pullback to a continuation of that move. This study demonstrates the continuation concept. It also examines a setup that suggests the market is 1) in a long-term uptrend, and 2) overbought short-term, but 3) not stretched intermediate-term.
These results appear to suggest a pretty consistent upside edge over the next 1-3 weeks. The short-term (1-4 days) is a little dicey and I am seeing other evidence saying a short-term pullback could occur. But the action of the last week seems to have generated some nice momentum for the following weeks.
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