Thursday, July 11, 2013

Sometimes Overbought Suggests More Strength

When the market begins to get overbought it will often suggest a pullback is likely.  When overbought gets powered through then odds will sometimes shift from a pullback to a continuation of that move.  The last two nights I have seen some studies suggesting this scenario.  The study below is on that I have showed a few times in the past.  All stats are updated.

These results appear to suggest a pretty consistent upside edge over the next 1-3 weeks.  In fact, below is a profit curve showing just how consistent it has been over the years using a 10-day exit.

That's an impressive upslope for a period covering over 50 years.


gmoney said...

Isn't the SPX above the 50 SMA? Per my chart I don't see this setup. Thanks.

Redford said...

As gmoney says, SPX is trading well above the 50 SMA. Could the study table simply be mis-labeled?

Rob Hanna said...

Thanks Guys. It was mis-labled. I have fixed it to read " < 50-day high", NOT " < 50ma".


gmoney said...

Thanks Rob!

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