A Simple Measure of Overbought in NASDAQ is Suggesting a Pullback

Posted on March 7, 2016 by

Friday was the 4th day in a row that the NASDAQ closed higher. While this may not seem to be a big deal, it does not happen very often when the NASDAQ is trading below its 200-day moving average. The table below shows results following all times this has occurred since 2002.

2015-03-07 image1

Results here appears to be strongly bearish. And the edge persists for up to 2 weeks.  The note at the bottom is worth considering, in that all 21 instances saw some kind of pullback in the next week.  Traders may want to keep this in mind over the next few days.
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About the author:

Rob Hanna is the founder of Quantifiable Edges, a quantitative market research service he has run since 2008. His research focuses on statistical analysis of U.S. equity markets. In 2009 he published "The Quantifiable Edges Guide to Fed Days," available on Amazon. He was named the 2024 recipient of the National Association of Active Investment Managers (NAAIM) Founders Award and has since joined the NAAIM Board of Directors. Rob also works with Capital Advisors 360 as an investment advisor representative, where he utilizes quantitative and volatility-based models. Follow him on X / Bluesky / StockTwits / Facebook / Substack