Bouncy Dow? Though I think some of the reasons I gave in my previous post apply equally well to the Dow and S&P, I'm mainly talking "how," not "why": In my observation the why's usually get filled in (revised and moved around) afterward, through use of 20/20 fundamental/technical hindsight.
As for INDU specifically, the two-day pattern has appeared in the Dow several times this year (most recently in line with the Nas 10/12-13), including by way of the weekend-of-doom model that we may be in the middle of now (6/16-19, 2/25-8, and 1/28-31). In all of these cases, as currently, the index and/or stock first makes one (or more) statistically unlikely moves in one direction or another. I'm using moves in excess of two standard deviations beyond the 100-day norm, but there are lots of ways to judge them, of course. The rubber band gets stretched, typically one notch extra by way of a last gap down, then snaps back violently (this happens downward as well as upward, sometimes in immediate succession).
Abstract mathematical probability does favor such a bounce, quite possibly as early as tomorrow, and we do seem pretty nicely set up, but I'd be among the first to look for and be wary of the exception that proves the rule, the even more extremely extreme rarity. If I do try to trade a developing reversal, it will be with the riskiest of my risk capital. |
