I’ve often spoke in the past of the importance of putting smaller patterns into proper context based on larger patterns or trends.  In Sunday night’s Gold & Silver Subscriber Letters I showed some studies that exemplified this concept nicely.

The studies looked at the possible impact of 5 consecutive days of SPY making an intraday high.  (This triggered at the close on Friday.)  I broke it down to see all times the 5 higher highs were accompanied by a 50-day high versus times they weren’t.  First let’s look at times where 5 higher highs occurred without a 50-day high.

Stats over the 1st few days suggest a possible downside edge.  After 5 higher highs the market will often need a breather.

But what of times (like Friday) when a strong uptrend exists and the market is also making a 50-day high?  Those stats can be found below.

Interestingly, the number of instances was exactly the same.  But with an intermediate-term rally also occurring the tendency to pull back no longer exists.  So 5 higher highs do not appear to suggest a bearish edge in situations like the one that set up a few days ago.