Oversold Short and Intermedaite-term Suggest a Short-Term Bounce

Below is a study from last night’s Subscriber Letter. It looks at when happens when ths SPX has been oversold short-term (via RSI2) and intermediate-term (50-day low).

With 8 of 9 instances trading higher and an average return of 2.65% 3 just 3 days later there appears to be an upside edge. Of course this market has been ignoring oversold conditions for several days now. Still, I’d be more inclined to bet on a short-term bounce than against one.