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Back to Back Outside Days for SPY

Thursday marked the 2nd day in a row that SPY posted an outside day. (An outside day is a day where the security or index makes a higher high and a lower low than the day before.) It’s quite unusual to see 2 consecutive outside days. I last examined back-to-back outside days for SPY in the 5/23/13 subscriber letter. I have updated that study below.

The numbers look very impressive.

It is also worth noting that this pattern has also done well with QQQ in the past.

A Turnaround Tuesday Setup

I've discussed many times in the past that Tuesdays have a well-earned reputation for being a day when the market will often halt a decline.  The study below is one from the larger Turnaround Tuesday study published in the 9/25/12 blog. All statistics are updated.

As you can see the market has strongly favored a quick move higher.  And when that move hasn't happened on Tuesday it has often happened in the next few days.

Some Evidence It Is About Time For SPY To Pull Back

SPY has now gone 11 days without closing below its 5ma, and it closed Tuesday at another new high. The study below is one I’ve shown a few times over the years, most recently in October.  It looks at other instances in which SPY has traded above the 5ma for at least 2 weeks and is now closing at a 10-day high. All results are updated.

In the past this setup has commonly been followed by a short-term pullback. The downside edge doesn't last long, though. It seems to pretty much play itself out over the first 2 days.  It is not an overwhelming edge, but it is still worth noting that SPY has been short-term extended for a while and the normal course of action at this point is a little pullback.

Should You Quit Trading Early Today?

The table below is from a study I showed in last night’s subscriber letter.  It shows how SPY has performed every year, during the last 15 minutes of trading for the year.

On average SPY has lost 0.25% in the last 15 minutes of trading.  And if you just look at the losers, the average loss was 0.345%.  Last year was the 1 big up year (excitement over avoiding the Fiscal Cliff?).  If you are a daytrader with a long position, this might be a good day to close up shop 15 minutes early…

VXO Is Suggesting An Immediate Pullback - Or None At All

Thursday we again saw the VIX and VXO close well below their recent mean.  Such stretches suggest a collapse in fear among investors.  The study below was last seen in the 10/21/13 subscriber letter. It looks for stretches of 15% or more that have persisted for three days.

Based on the stats table there appears to be a downside inclination. I find the note at the bottom of the study to be especially interesting. Nearly every case has experienced an almost immediate pullback, but those that didn't went without pulling back for a long time.

'Twas 3 Nights Before Christmas (updated Nasdaq version)

I’ve been posting and updating the “Twas 3 Nights Before Christmas” study on the blog here since 2008.  The study will kick in at today’s close.  This year I will again show the Nasdaq version of the study.  While all the major indices have performed well during this period, the Nasdaq Composite stands out as the big winner.

The stats in this table are strong across the board, and the note at the bottom shows reliability that has been nothing short of incredible.  Traders may want to keep this one in mind over the next couple of weeks.