Interesting data point from Jason Goephert, Sentiment Trader:
There have been 9 other times the S&P 500 tracking fund, SPY, hit a three-month low, then the next day opened for trading at least +0.5% above the previous day’s high and closed at least +0.5% above the open. 7 of the 9 led to gains over the next three weeks. The two failures were both in the summer of 2002. Overall, it was a good multi-week kick-off signal.
Then there is this from Merrill’s Market Analysis research team:
A 90% up day is bullish on average 10 to 65 days out
Yesterday’s (Nov 19) 2.0% rally in the S&P 500 was confirmed by a 90% up day on the NYSE. Since January 2006, there have been 62 90% up days out of a total of 1733 trading days – 90% up days have occurred only 3.6% of the time. After a 90% up day, the S&P 500 has below average 1, 2, and 5-day price returns and well above average 10, 20, 30, and 65-day returns.
I am not sure what this means going forward, but they are the other side of my view.