Wednesday, September 17, 2008

An Interesting Pattern Of Strength

After gapping down Tuesday morning the market put in a sizable rally. The S&P gained over 4% from open to close. I looked back at other times the SPY gapped lower and then gained over 3.5% from open to close.

The low number of instances means this is more “interesting” than “significant”. The pattern was fairly consistent as 5 of the 6 closed below the entry point within the next week before launching higher. The six instances occurred on 10/28/97, 10/15/98, 1/3/01, 7/24/02, 3/17/03, and 1/23/08. Some significant bottoms in that mix. The only instance that didn’t pull back within the next week was 10/15/98.


Trader Kevin said...

Rob, is there a 9/16/08 CBI Reading update? Thanks!

Anonymous said...

Rob, don't you think 6 datas is too small to be considered statistically significant.

Rob Hanna said...

Yes. That's why I wrote that it was "interesting" but not "significant". (First line under the table.)

Not all of the tests I post are "significant". Some are just oddities I find interesting or notable. See my July 10th post for some of my thoughts on statistical significance.