Nearly a perfect up candlestick today

Discussion in 'Technical Analysis' started by reno4nook, Oct 24, 2005.

  1. in the S&P daily chart.

    The low was the open for today
    The close was one tick off the high for the day

    Although this was one tick off from being a perfect up candlestick, I decided that was close enough to look at the recent history.

    I checked back over the past 2 years to see what happened after a perfect up candlestick appeared on th S&P

    There have been 11 instances of perfect up candles over the past 2 years.

    In 8 trials, the S&P was up 10 days later
    In 3 trials, the S&P was down 10 days later

    In 2 of the down trials, the S&P only dropped a total of 6 points.

    There was one terrible trail where the S&P dropped 30 points after 10 days. This occured on Dec 29th 2004, right before the big sell off in Jan 2005.

    Other than that one trial, the system seems to be a good bullish indicator.

    Here are the results of the 11 trails after 10 trading days.


    The average gain was 11 points
    The average drawdown was -7 points

    If you throw out the one terrible trail the results are better.

    The average gain was 14 points
    The average drawdown was -4 points

    I would say odds favor the longs over the next ten days, especially considering November is historically a very strong month for the market.

  2. just21


    What was the gain loss, after this pattern, on the next option expiration day?
  3. Although I'm not talking about candlesticks specifically...

    However, someone here at ET a few years ago onced talked about statistics that the S&P since 1990 has not had a losing swing trade (I guess as long as you didn't use a stop) from the end of October to November mid-month.

    I totally forgot about it until today.

    Today in one of the chat rooms someone different posted a link to a different spin on things with similar like results...

    Therefore, buy on Oct 26th Wednesday and then sell on November 14th Monday.

    Also, I know another guy (not mrci website nor the ET trader from years ago) had many other statistical situations that produced almost winners every single time via entering a trade on one particular trading day and holding it until a later specific trading day.

    (He's an institutional trader in Montreal makine big bucks for his firm)

    It's caught my attention and I'll most likely not ignore any bullish candlestick patterns between Oct 26th - Nov 14th.

    In fact, if the market action from today can keep most of its gains going into Oct 26th and the stats show further gains by Nov 14th...

    Many will see that today's new FED Chairman announcement as the spark to the S&P.

    Last of all, I saw a lot of guys in other threads here at ET today feeling the pain of trying to Short and hold those shorts beyond their pain threshold...

    Not a good day to be fighting the stats about which way the market is going to go.

    Anybody remember how the markets performed when A. Greenspan was announced as the new FED chairman ???

    If you've obviously been trading for a very long time...congrats.

  4. just21


    Option expiration is on the 18th Novemnber!
  5. Reno4;
    Probably does favor uptrends in SPY,QQQ, oil /gas stocks;
    and its a bull market you know & strong seasonals.

    DIA looks more bearish & has been much below 50 dma;
    and big city newspapers look even more bearish.:cool:
  6. Not to be out done, today the S&P posted a PERFECT candlestick.

    Open = low
    Close = high

    that's gotta be bullish