Wednesday, July 14, 2010

A Pattern Suggesting A Pullback

Large gaps up like yesterday that reach new highs, go unfilled and finish above the open don't often follow through over the short-term. Below is a study that appeared in last night's Quantifinder that demonstrates this.

This study suggests a fairly potent downside edge over the next 3 days. Occurences are a little bit low but with only 25% of instances trading higher 3 days out and an average return of -1.4% I believe it is worth taking under consideration.


Anonymous said...

Since you're clearly testing whether your alert and grateful readers are snoozing or not, we've met the challenge. Here is the correction to the text:

"with only 25% of instances trading lower 3 days out"

==>goes to: "with only 25% of instances trading HIGHER 3 days out"...

--another great post Rob, thanks as always!


Rob Hanna said...

Thanks Daniel! I fixed it.