We’ve seen numerous times how low Spyx readings typically lead to weakness or at least underperformance over the next few days. Both the S&P and the Nasdaq posted low readings on Monday. I decided to look at the situations where an extremely low reading came in an extremely overbought market as we’re seeing currently with the Nasdaq. This first test uses a Spyx level of 20 or below:
A short-term bearish edge is apparent based on the above. Not shown but also notable is that 85% of all instances closed lower than the close of the trigger day at some point in the next 3 sessions.
Instances here are a bit low but it appears the edge is even more pronounced with the extremely low Spyx reading.