Has anyone back tested a very simple strategy of buying relative strength on big down days such as today in names that are not considered defensive? For example the broad market is down 2% on a given day but a particular growth or value name is up on the day or barely down, what do returns look like going out a month/3 months...etc...
I dont know about returns going out for months but today SPCE was quite strong relative to SPX despite the significant gap down in both. So SPCE was a buy, but its not an easy buy, emotionally it can be hard to pull the trigger
SPCE could be an example of what I am talking about but I think its slightly skewed currently because it is a hot stock with a lot of fast money flowing in and out of it right now. Im more talking about say a day the Indexes are down 2% but American Airlines is up 1.5%, does it mean anything longer term?
If a stock has been beaten down for a significant amount of time (months, years) and starts to display that kind of relative strength, its usually bullish. Especially if the stock is shrugging off bad news
Notice that while retail was buying TSLA, SPCE and MAGA stocks, the best program trading firms were selling to retail all they wanted, and were net short for the week; setting up for Expiration Week and the February Mini-Crash. Program Trading volume last week was over 86% and normal for Post Unemployment. https://www.elitetrader.com/et/threads/program-trading-stock-report.340733/
What is program trading? If it was really accurate won't you make tons of money from folloiwng the big boys.