After the big down day last Tuesday the market has not done a lot. In fact, it has closed within the true range of that 1 bar every day for the last week. The bears failed to follow through on that selloff, but the bulls have not managed to move the SPX back out of the range either. This triggered the study below from the Quantifinder.

Over the last 26 ½ years or so the SPX has burst higher out of this “failed selloff” and consolidation on a consistent basis. But the implications are only bullish for a few short days. After that there does not appear to be a decided edge for either the bulls or the bears.

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The study below is one I have shown here on the blog for a long time. It looks at relatively sharp selloffs from intermediate-term highs. It shows that there has been a strong tendency for situations like the current one to bounce. Results are updated.

The stats all suggest an upside edge over the next 1-5 days. Traders may want to keep this in mind the next few days.

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Friday was the 1st time SPY has closed at even a 5-day low since 3/26. The study below is one I have shown before. It examines other times when the SPY closed at a 5-day low for the 1st time in over 2 weeks. All stats are updated.

Results here suggest a moderate upside edge. The lesson with this study seems to be that persistent uptrends normally wither before they die, rather than turn on a dime.

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The employment report was released at 8:30am on Friday and the reaction in the futures was not good. ES sold down over 20 points in the next 45 minutes before closing for the day. As of Monday morning it has not bounced much. So it appears we are about to see a sizable gap lower..

Since inception of the SPY in 1993 there have only been 6 instances where the employment release came on Good Friday with the markets closed. And only 3 of those times did the market gap down to start the day on Monday. Here’s is what happened between the open and the close on Monday after those 3 instances.

There is nothing we can really learn with any degree of confidence based on just 3 instances. But it is a little encouraging for the bulls that the initial open lower was a bit of an over-reaction all three times.

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One thing to be aware is that while the market is closed on Friday for Good Friday, the BLS will be releasing the employment report. This is only the 11th time since 1980 that this has happened. Below is a list of all previous instances along with their performance on Monday when the market was open again.

Six instances closed down and four closed up on Monday, so on the surface this study does not seem substantial. But what is notable to me is that 7 of the 10 instances saw the market close either up or down by more than 0.75%. (Those are all circled in blue.) That shows the Monday reaction has often been volatile, and suggests risk may be elevated a bit because of this.

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