Blog: Outside Looking In

With many of these stats I've shown this week, I would conclude now would be a good time to either buy, wait or run.

• 70% of me says to buy on the -5% pullback, 25% says to wait for a deeper cut, while 5% says to run and hide.
• We are missing some key features here, they just aren't present at the levels I'd like to see for a Flushed out bottom.
  • Volume has been average, nothing special, nothing exhaustive, just normal.
  • Breadth has been low, but not at the Pre-Tariff-Crash levels I'd like to see.

Thursday gave us a powerful outside session with both a Higher High and Lower Low

• That 1.44% open was a Top 1% event, the 30th best of 20 years and it closed the session down.
  • For context, prior to Thursday, the 100 best 20 year opens have closed their session down only 10 times.
    • 7 of those fit our current context where the 1-3-6-9-Day Returns were down.
    • 3-6-9-Day Forward Returns later, 5 of 7 where positive
      • The average gain of those five, 9-Day Forward Returns were 6.53%
      • The loss of those two, 9-Day Forward Returns were -.96 & -10.83%
  • The True Range was 3.56% a Top 4% 20-Year Ranking
  • Many of these stats (7 of 12) are in their extremes
    
    

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Typically, a Negative/Positive open is highly correlated to a Negative/Positive close, which wasn't the case for Thursday's reversal.

• We have a Streak Count of 4, on Negative openings, leading to a negative close.

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The past 11 times an outside day closed down the 3-Day Forward Returns had a 45% Win ratio

• For context 11-21-63-Day stats are provided for both sides of the tape.

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Digging deeper, at present, our 1-3-6-9-Day Returns are down, so here's the 3-Day Forward Returns after an outside day.

• The left column shows us a respectable 73% Win Ratio, likely these event are what is defined as an oversold short-term condition in a Primary Medium/Long Term Uptrending Market.
  
  

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Happy Friday.... Jason