Sample size, that is.
I set out this weekend to model the current market action. I sliced it and diced it, looking over the last week to the last few days. Using SPY, I looked back at the last 9 days. I modeled the gap up, doji, and gap down of the last few days. I loosened the criteria to catch more samples. The bottom line is that what we have seen over the last two weeks is not a common pattern. Seeing a 6%+ gain in little more than a week, with all the consecutive up days, and then adding a little gap up, doji, and gap down, is just not something that has happened regularly.
What I am trying to say is that I don’t trust what I am seeing.
I was going to publish some graphs of the various scenarios, but I just do not think there are enough samples to be able to generalize the results.
I am still short, with my position down -2.52% as of Friday’s after-market action. As my position is the double-levered SDS, that could change fairly quickly, and I may still exit with a small loss or small gain. The point is to exit quickly, accepting that either way, the gain or loss will be small. I’m not seeing much of an edge here. Thus, I exit quick, and I accept a small return, or lack of.
If I had to simply guess and ignore my research, I would continue to guess that there is more downside here. That was my thesis on Friday and it is still working for me. If I were to use my research, I would be neutral, to slightly bullish. Again, this is moot because I do not believe there are enough samples to trust.
Anyway, I am taking a vacation day tomorrow from work, so I’ll have time to deal with my short position. Unless something wild happens, I intend to cover tomorrow.
Aside: PDS is giving a few new buy signals, which it hasn’t done for a couple of weeks.
Thanks shedder
Sometimes better to look at systems wearing mitts instead of gloves
Too much curve fitting could lean to a confirmation bias
Keep up the good work
I too am still short (hedged) just doesnt smell right esp with the SHOMP readings in the last week or so
Love the mitts instead of gloves analogy!
I think you should of skipped adding the doji and the gap down and concentrated just on the powerful up move in such a short period of time
I did. It’s bullish. However, there is always a pullback after such a move. When will it occur?
Short position is now comfortably in the green.
Testing embedding a link.