The evidence I most often show when illustrating a study is a statistics table like the one below. But it’s not all I look at and it never tells the whole story. In the subscriber letter I’ll often go into more detail on some of the studies. Tonight I thought I’d show an example of one study whose stats table I consider to be a poor representation of the truth.
Tuesday’s rally was the biggest % gain in at least 10 days. It followed Friday’s selloff which was the biggest % drop in at least 10 days. With the market trading above the 200ma and a new 10-day high being made on Tuesday, it made for an unusual setup. Below is a stats table showing similar setups in the past.
From the stats table it appears there is a fairly strong inclination for more upside over the next several days. Now let’s zoom in a bit on some of the results. I chose to zoom in on the 6-day here exit since that had the highest win %. Below is an equity curve with the 6-day exit strategy.