Eat, Drink, and Be Merry, for Tomorrow We (Might) Bounce

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Based on my breadth indicators, we are nearing breadth readings that typically signal a bounce is near. We are not quite there yet.

I want the green Decliners Indicator to be above 90 and the red Number of Stocks Above Their 5 Day Moving Averages to be much closer to 800.

However, we are in a period of positive seasonality, as evidenced by this recent post from Quantifiable Edges: Twas 3 Nights Before Christmas (Again). And here is another study that finds similar results: The Christmas Trade.

Because the market is nearing oversold and there is positive seasonality, I think a bounce is likely. Surely with the President on vacation and Congress shut down the market can forget about the Fecal Cliff for a day or so? For Santa?

2 Responses to “Eat, Drink, and Be Merry, for Tomorrow We (Might) Bounce”

  1. hey wood, can u do a ytd backtest on the moving average signal?

    buy spy when above:

    10sma
    12sma
    10ema

    just curious if they beat buy and hold this year. I think you’re familiar with them. thanks

  2. That shouldn’t be a problem to backtest. I’m curious. Do you think the results will beat buy and hold, or not? I’m curious too.

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