Trading the Odds

A statistical approach to profit in the US equity markets, trading the markets like professional card counters are playing Blackjack or expert poker players are playing Poker.

Friday’s sessions mirrors Thursday’s session

FRIDAY’S SESSION MIRRORS THURSDAY’S SESSION

Thursday’s session was already remarkable due to the fact that the S&P 500

  • posted a higher open,
  • posted a higher high than the previous session’s high,
  • posted a higher low than the previous session’s low,
  • posted a low above the previous session’s close,
  • posted a higher close,
  • and finally closed above the open.

(see my posting Trading the Odds on Friday – March 27, 2009)

but -going into the final hour- Friday’s session (at least as I type this post) seems to completely mirror Thursday’s session due to the fact that the S&P 500

  • already posted a lower open,
  • already posted a lower low than the previous session’s low,
  • up to now only posted a lower high than the previous session’s high,
  • up to now only posted a high below the previous session’s close,
  • currently would’ve posted a lower close,
  • and would currently close below the open.

Unfortunately -from a statistical point of view-  those may be disappointed expecting that this time probabilities and odds would favor a bullish  (intraday) tendency for Monday’s session mirroring the (expected) bearish tendency for today’s session (with the exception of a probable higher open).

Since 01/03/2007, there were 84 occurrences which fulfilled the setup with those (bearish) ‘6lows listed above, thereof 51 with a higher open on the next session than the previous session’s close (as today’s close will probably be), and 33 sessions with a lower open. The respective probability of 60.71% for a higher open on Monday’s session would hence be significantly above the respective at-any-time probability of 41.56%, BUT the respective probabilities for a higher high (22.61%) are significantly below and those for a lower low (76.19%) are significantly above the respective at-any-time probabilities for a higher high (48.05%) and lower low (50.65%), forecasting (at least a temporary) intraday weakness for Monday’s session.

From a statistical point of view Monday’s session may see a bullish start with a probably higher open, but loosing steam after the open to probably post a lower low during the session. The probability for a higher/lower close is comparable to the respective at-any-time probability.

The column ‘w/Survey I‘ shows the respective figures concerning the setup mentioned on top of the post (and the S&P 500’ behavior the next session), ‘w/Survey II‘ -for comparing purposes- the respective figures concerning those sessions posting a lower close only (that means the S&P 500’ behavior the session after the S&P 500 posted a lower close, not the session with the lower close, and not taking into account any lower open, lower high, lower low …, but a lower close as the one and only condition).

survey-20090326-5

(click on image to enlarge)

Successfull trading,

Frank

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Filed under: Daily Update

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