Friday’s action caused SPY to close in an interesting position. Traders could look at the chart and say it is “short-term oversold” due to the fact that it closed at a 5-day low for the 1st time in a while. They might also say it is “short-term overbought” since it closed above its 10-day moving average. I have found that edges often arise when something is overdone in one timeframe, but overdone in another direction in another timeframe. The study below looks at the current discrepancy along with the fact that it was the 1st 5-day low in at least 2 weeks.

Results here suggest a solid edge over the next 1-10 days. And half of the gains have been realized in just the 1st 3 days. Traders may want to keep this in mind as they establish their bias over the next few days.

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