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Circling back to the ‘all or nothing’ cluster signal from last Thursday, this latest signal generated the smallest max drawdown on record at only 0.5%. That puts it firmly in the $ camp of cases with low drawdowns and a higher S&P one week after the ‘all or nothing’ cluster. Recall that stocks typically did quite well in the weeks to follow. I’ve extracted those signals from the original table and started it a week later to illustrate…

SPX Higher, Max DD <2% One Week After ‘All or Nothing’ Cluster
03/24/22… SPX ???
07/08/16… SPX +2.1% three weeks later, max DD 0.0%
02/24/16… SPX +5.0% three weeks later, max DD 0.2%
10/28/14… SPX +3.4% three weeks later, max DD 0.8%
07/05/13… SPX +3.7% three weeks later, max DD 0.0%
10/13/11… SPX +4.8% three weeks later, max DD 1.0%
09/13/10… SPX +1.3% three weeks later, max DD 0.6%

What’s particularly interesting is that drawdowns remained extremely low in the weeks following each of the prior cases. If the S&P follows a similar path this time around, we should not see more than a 1% intraday drawdown from Thursday’s close over the next three weeks. That’s a pretty good risk/reward setup given the kind of environment we’re in, with the acknowledgement that the sample size is very small.

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