Yesterday I wrote about the 3:30-4:00 ramp.
Yesterday it was noted, “Since January, the best hours to own stocks are 11:00-12:00 and 12:00-1:00 when you track the Dow, S&P 500 and Russell 2000. The chance of success here is 60% for both time periods. The next best period is 3:00-4:00. That batting average is down to 58%. It has been higher“.
In early trading today, the Dow/S&P 500/Russell 2000 sold off on the gap open. My definition of selling off is the opening print 9:30 to the close at 9:59. All three indexes were lower. Then we traded sideways from 10 to 11 with the ramp coming between 11 and 12.
If you knew that 11-12 is one of the two best hours year to date, then as you saw the move starting you would have the confidence to trade it. IWM moved 0.38% a nice move if you were able to play it. I did. Probably so did the HFT players.
There were several comments on why track hour by hour. The answer is simple. The HFT community starts new programs every hour on the hour. Personally, I think this is idiotic. It makes more sense to start a program when the intraday technicals indicate it is time to buy or sell.
Now we are at the beginning of the 1-2 time period which is the worst hour of the year statistically. As such, one should not expect much. Therefore, if we do move higher, then I would expect the rest of the day to have a positive bias. If we struggle, that is par for the course of 1-2.
Note one comment I made yesterday was that during the week of July 11-15 all three indexes struggled from 3-4 because they had made money earlier in the day and it was a big money week. If we get into the 3:00 hour being up 15 or more points on the S&P 500 from 11 now, then Ramp Capital may not jam it to the upside from 3:30 t0 4:00. Especially with key several economic data points due out tomorrow.
The reason I model hours, days, weeks and months is that it gives me a perspective on what typically happens. Simply put this is a much better approach than guessing. Will not perfect, it does lead to a higher success rate.
The good thing about this piece is that come 4:00 you will know whether my analysis was useful or not.
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