Thumbs up to TraderFeed’s Dr. Brett and his post Day and Night Sessions: This Bear isn’t Nocturnal . Dr. Brett shows that the resiliency/bullishness of the overnight market relative to the daytime market that I discussed in my post The Markets are Nocturnal is still intact.
In a nutshell, bullish trends in the stock market tend to play themselves out in the overnight market (yesterday’s close to today’s open), while bearish trends in the daytime market (today’s open to today’s close). Today’s bearish market continues to follow this pattern.
How could this simple but powerful observation be exploited in a trading system? I don’t have an answer for that (yet), but it’s on the proverbial to-do list. As always, more to follow…
Happy Trading,
ms
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Overnight Gaps in Up vs Down TrendsFrom: marketsci.wordpress.com
Post Date: 2008-10-02 01:55:12
This report was inspired by Quantifiable Edges’ post about the recent large overnight gaps in the stock market and what it portends for future returns (here’s a hint: it’s historically bullish). Specifically, I wanted to test Rob’s assertion that the market is more likely to gap up or down big when in a downtrend.
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One of the ways I justify spending this time on the MarketSci Blog is it gives me an opportunity once a month to share with readers our independently-audited trading results. Click for more information about accessing our YK Strategy via either a subscription or managed account.
YK TRADING STRATEGY
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