Despite the strong move higher over the last several days, the market has been consistently producing bullish studies.  At Tuesday’s close I noted the first bearish study to trigger in a while (using the Quantifinder).  It is an interesting one so I thought I would share it on the blog.

The market has seen a lot of strong finishes lately.  When it consistently closes near the high of the day it suggests optimism on the part of traders. This optimism is now at a level that suggests it is a bit overdone and there is a good chance of a pullback. The study below exemplifies this concept.

Downside risk appears to be reaching a level that the market will often experience a brief pullback.  But while the downside edge appears to remain in place for a full week, most of the edge has been realized over the 1st 2 days.