Bring On The Fear
The market is oversold. Ideally I’d like to see VIX levels higher as this would show there’s some fear out there but that’s not the case.
A good solid down day is what the market needs in order to induce some fear and bring prices to levels that will lead to a substantial bounce. In the meantime, scaling into the indices is suggested and can be found in the daily set-ups.
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The Significance of Closing Prices to Their Daily Bar Range
About a decade ago we quantified the significance of where a stock closes in its daily range and the short-term impact of that close. What we found was that oversold stocks that closed in the bottom of their range tended to be have greater short-term edges than stocks that did not.
The following is a recent study done by Quantitative Systematic Market Analysis, a very well written blog. The study was done on ETFs and is consistent with the studies we’ve shown in stocks. Also, look through his blog because he has topics which will likely be of interest to you.
https://qusma.com/2013/09/11/
The above excerpt is from Larry Connors’ Daily Battle Plan – A professional-grade trading information service that will help you understand the quantitative metrics behind each day’s market conditions and how they point to selective strategies for high-probability trades.
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