Market direction indicators, 2

Continuation of discussion about How Markets Really Work: A Quantitative Guide to Stock Market Behavior

Three or more consecutive Higher Highs or Lower Lows

In general, Larry observed that over the short term (1 day and 1 week), it’s better to short sell after 3 or more consecutive higher highs and that it’s better to buy after 3 or more consecutive lower lows.

In particular, over the short term (1 day and 1 week later), following:

Three or more consecutive higher highs, the market goes down, especially when the market is already below its 200-day moving average; and

Three or more consecutive lower lows, the market goes higher;

...cont'd tomorrow...

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