New York Harbor RBOB Gasoline Futures (NYM.RB) dropped -1.6% during Wednesday's session to close the day at $2.4355 per gallon. Unleaded gas futures also recorded a large* five-day decline of 5.2% on Monday. Moreover, RBOB experienced a bearish MACD crossover on the day, where the daily Moving Average Convergence Divergence indicator line (the difference between two exponential moving averages) crosses above the slower signal line (an exponential average of the MACD line).
* Percentage loss is more than one standard deviation stronger than the average percentage change measured over the last 30 trading days.
Q: How has Nymex RBOB performed in the past when it has experienced a bearish MACD crossover while recording a large five-day decline?
A: According to the 10 previous occurrences of this event, EventEdge indicates that RBOB has shown a strong bullish edge that peaks five trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Wednesday, Jan. 9, 2008) is Wednesday, Jan. 16, 2008.
Unleaded gas rallies in 80% of the cases (8 of 10) by an average of 4.8% relative to the close on the event date. The average of the 2 declines is -1.4%. The overall return of the 10 cases is 3.6%, which, based on the close on the event date ($2.4355), provides a target price of $2.5232.
The second graph reflects adding the fact that NYM.RB is above its 20-day moving average to the event above. Though it only has six occurrences, it illustrates how much stronger the edge becomes.
In this case, NYM.RB has shown a very strong bullish edge that also peaks 5 trading days after the event. NYM.RB rallies in 100% of the cases (6 of 6) by an average of 5.2% relative to the close on the event date. The overall return of the six cases is 5.2% and has a target price of $2.5621.
If you would like to see more details of this historical edge, go to www.markethistory.com
To see this ideas is EventEdge® click either 1st Graph or 2nd Graph.
Ronish Patel is an analyst with MarketHistory.com.
