Why The Weak 2-Day Bounce Could Be A Positive For The Next Few Days

SPY has now risen 2 days in a row but still failed to close above the close of 3 days ago. While this may be frustrating for those short-term bulls who were looking for a bounce, it has normally been followed by further gains. This can be seen in the study below, which was featured in last night’s subscriber letter.

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The stats appear to suggest a bit of an upside edge over the 1st 2 days. To see the importance of the “close < 3 days ago” filter let’s also examine those times when the 2-day rally was strong enough to close above the close of 3 days ago. Those results are below.

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As you can see, that small change makes a big difference. Two days out total net profit is about the same despite the fact that there are about 5 times as many instances.

Also notable about the next few days is that Wednesday is a Fed Day. For research regarding Fed Day edges, you may use the Fed Study label on the blog, or check out the Quantifiable Edges Guide to Fed Days book.


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