The SP futures are down significantly. A number of factors set the stage for a down close today and an up close tomorrow. First, I wanted to see what happens to the SP futures on a Monday when Friday's close was down by at least 1.5%. There were 79 occurrences and the close was mixed. By adding that Monday's open was lower by at least .5% (as the futures currently suggest), the number of occurrences reduced to 21 and the close lower in 76% of them. From there, I stipulated that the bond futures also closed lower on Friday. Why? A lower close in the bond takes out possible "flight to quality" scenarios from the prior day. Under this condition, the sample reduced to thirteen and the close lower in eleven of them (see table below).
Here's a few observations: First, the intraday high was positive in just four of the results. This strongly suggests a "sell rally" approach to the day. Secondly, the close was lower than the open in all but one of the eleven that closed lower.
Okay, this may be a little presumptive but I wanted to look ahead to Tuesday in case the analog accurately predicts today's close. The table above shows eleven results that closed lower. Of those eleven, the open of the SP on Tuesday was higher in all but one and the close higher in all but three.
There's a lot of action between now and tomorrow Minyans but sometimes a look at history can help formulate a trading strategy. Most of all, remember that past performance does not indicate future results.
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