12 replies to this topic

[dcengr]

I did a quick study...

What happens if you sold short at the close on a day when the Qs gapped down by more than 1%, and covered in the morning at the open?

Then I did one where you would cover 2 days later at the open.. The results show that odds are about 63% that there's a gap up for Qs monday morning. And if you held monday, there's about 48% chance you would make money if you got out tuesday morning.

EDIT: Let me add that the 1% gap downs are really a sign of weakness, and a few days later, there was better than 50% chance of further weakness ahead.

Edited by dcengr, 09 September 2007 - 03:34 PM.

[ogm]

After reading a tonn of main stream media doom and gloom articles, crash posts all over message boards and dire predicitons for US economy and total global economic collapse.. I have a feeling that bearish concensus has formed. There is a mass hysteria out there. We have extremely high levels of fear and uncertainty. Borderline panic. And yet the darn market is still only 5% off the highs. Any move down tomorrow will probably generate another washout type selling event. Quite possibly Friday was one already.

[dcengr]

And let me add the fact that the last 4 occurances of this, it WAS profitable to hold short the next day...

I also tried looking to see if there was any bias if Qs were under SMA 50 at the close of the day it gapped down, and no, it doesn't really make much difference.

[relax]

[agree! a lot of negativity in mainstream news nonetheless without any data friday's data will set the tone until thursday in other words short term strategy, sell on gap/move up Yen trading below 113 - will not be pretty in Japan - 400 points down

Edited by relax_dk, 09 September 2007 - 04:07 PM.

[blustar]

Looks like a gap up to me too. Counter trend rally.

[linrom1]

Looks like a gap up to me too. Counter trend rally.

[rkd80]

Looks like a gap up to me too. Counter trend rally.

globex does not seem to suggest a gap up...why are you guys so confident?

[TradeMark]

dc Nice work, thanks for sharing. However, I think tomorrow will be one of the 37% not the 63%. TM

[dcengr]

As I've stated, the results show a tendancy to gap up on the following day where a fairly large gap down was experienced. This doesn't mean absolute, this doesn't mean the day won't be down. As someone has pointed out, futures are down. And I've stated it before that such a large gap down with inability to fill it is a fairly good sign of weakness and a few days later there was always further weakness (ie it didn't shoot straight up from here). But a few things that I just don't like here... 1) Since 9/11/01, the few days before 9/11 and 9/11 itself have not been bearish days, granted that there's only a few data points. 2) The fully short % here is above 30%, and if you have the historical TT poll results, one would know that out of some 50x that the fully short % was above 30%, the next few days being down were not very high. Again granted its all just odds. 3) Theres a few fed heads talking on monday/tuesday, and Ben is one of them. One could say that it could drive the markets lower, but they tend to be bull's best friends 4) MCO/TRIN went truly hog wild early last week.. tho this isn't necessarily bearish.. with 9:1 up days etc. On the flip side, 1) The # of small options traders going long got pretty frothy last week 2) The rydex traders were buying all last week, and especially friday they dumped in big on the long side 3) The SP small traders loaded up the @ss last week (tuesday report), and I've said many times we ain't going up til these guys capitulate and go short 4) EW wise, it looks like a 3-3-5 formation with wave 5 down ready to start. So since I can't make heads or tails of it, I'm going to sit out til the picture gets clear.

[JAP]

Looks like a gap up to me too. Counter trend rally.

No, I don't think so.