Close Below Open Would Trigger Sell Signal for Friday

December S&P futures opened up 1% Thursday at 1194.50. If the S&P ends with a gain today but settles below the open, a sell signal would be triggered for Friday. The reasoning is that we’re coming off three consecutive days of higher closes and white candlesticks (close > open) . When S&P futures post three rally days (higher closes, white candles) followed by a fourth higher close that coincides with a black candle, it usually precedes a very short-term change of trend. Since 1995 we’ve seen this specific pattern a total of 26 times, 22 (85%) of which led to a lower S&P close the following session, a huge edge over the 46% random chance for a lower close one day later in the same time frame…

Higher Close, Black Candle After Three Rally Days
07/27/10… S&P futures -0.8% next session
03/12/10… S&P futures -0.1% next session
02/22/10… S&P futures -0.9% next session
01/11/10… S&P futures -0.8% next session
12/23/09… S&P futures +0.6% next session
11/11/09… S&P futures -0.8% next session
10/12/09… S&P futures -0.3% next session
07/21/09… S&P futures -0.4% next session
01/06/09… S&P futures -2.7% next session
05/30/08… S&P futures -1.1% next session
11/30/07… S&P futures -0.6% next session
04/09/07… S&P futures +0.1% next session
11/16/06… S&P futures -0.0% next session
09/15/06… S&P futures +0.2% next session
04/21/06… S&P futures -0.2% next session
03/17/06… S&P futures -0.2% next session
07/14/05… S&P futures -0.0% next session
11/01/04… S&P futures -0.0% next session
05/28/03… S&P futures -0.3% next session
10/20/98… S&P futures -0.1% next session
01/30/98… S&P futures +1.6% next session (*)
06/16/97… S&P futures -0.2% next session
12/20/96… S&P futures -0.4% next session
05/15/96… S&P futures -0.1% next session
02/07/95… S&P futures -0.1% next session
01/27/95… S&P futures -0.3% next session

Categories : Archived Intraday Commentary, Intraday Commentary

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