Any TA is crap. That is why I asked the question, because this task is way more difficult than it seems at first sight.
Day preceding major macro releases, major earnings dates, weather on the coast which limits participation.
A useful post from poopy, I am impressed. I do have an earnings calendar attached to a tamagotchi already. Those are normally what I roam around, earning dates. I am not doing badly just by looking at that. I have noticed that the "day preceding major news" is not that reliable because daytrading gamblers think that they are clever by putting their heads early to the guillotine. So there is excitement and anticipation around those days, not just on the day itself. Which actually goes to the remainder of that, the day after major news might be a good one? Weather on the coast? are you aware of a thing called the internet?
There is some history that you are not aware of, don't judge when you don't have a clue of what is going on.
Truth be told there haven't been many slower days in the indices over the last few years and trading conditions have generally been very good on balance. If we arbitrarily define a slow day as one where the range is half or less of the 10 day average range, we've only had 15 this year out of 231 trading days as of last Friday's Close. Day trading conditions have deteriorated lately in tandem with the declining VIX as markets are trading at all time highs by the end of one of the best years for stocks in this millenium. I predict that Trump will make trading great again. If nothing else. As for slower days, they typically come after a big move (on the daily time frame) as markets consolidate before continuation or a reversal.
Thanks, that makes sense. I guess we have to agree first on what a flat range would be, and I would say that a flat day range should be inside a expected return. If we look at historical returns for indices, they move in a very defined range. It is hard to move an index by more than 3%. I would consider then that anything below that 3% should be normal, just regular market action. So a "big move" would be when that index moves by more than that 3%. And you are saying that after that, the next day shouldn't have much action. I can backtest that. I'll come back with the result.
I was referring to multi-day moves, although in some sense it would be true on a day-to-day basis as well. However, due to the bullish nature of the stock indices, you may find that what's true on the upside is not true on the downside, i.e., a 3 % down move may have an increased probability of a rally in the coming days whereas a 3 % up move may instead see consolidation or continuation. Anyway, you'll be hard pressed to find any hard rules that work well long term in back-testing. I honestly believe that even if you work with data there's still some artistry and experience required to make sense of it all. The market is a big puzzle to solve and there's so many elements to integrate and consider that a simple back-test may just not cut it. If we look at where the markets are right now, SPX is up nearly 30 % on the year which is pushing all historical records this millenium. We'd need to go back to 1997/1995 to see a year exceeding 30 % on the high print. In summary, the upside is likely limited and the bullish sentiment is still very strong in one of the strongest months of the year, so it's no wonder ranges are getting contracted as bears got rekt and the VIX have been steadily decreasing. Since 1990 we've had 24 years which were green on SPX. For December, 20 out of 24 months were green with an average change of 3.35 % (excluding red months). 3 of the 4 red months were flat and the worst month closed down 2.15 %.