Q: How has SPX performed when, in April, it gaps higher to cross above the 50-day highest high?
A: According to the 39 previous occurrences of this event, omitting repeat occurrences within 10 trading days, SPX has shown a weak bullish edge that peaks six trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Friday, April 18, 2008) is Monday, April 28, 2008.
SPX rallies in 85% of the cases (33 of 39) by an average of 1.7% relative to the close on the event date. The average of the six declines is 1.3%. The overall return of the 39 cases is 1.2%, which, based on the close of SPX on the event date (1390.33), provides a target price of 1407.01.
The graph below uses the t-score in place of the usual z-stat. This serves to highlight the substantial number of previous occurrences. The z-stat is calculated by dividing the average return by the standard deviation. The t-score is calculated by multiplying the z-stat by the square root of the number of occurrences.
Note: We have just recently published two long-term bearish ideas on U.S. coffee futures (see links below), the most recent last Friday. Today we found a short-term bullish edge, but no edge in the long-term. So, according to history, it may be wise to wait to go short until next week.
To see today's idea in our EventEdge® analysis tool click here
Related Ideas:
Coffee Futures - Time for a Correction? - April 18, 2008
Coffee Futures - Head Fake - April 10, 2008
If you would like to see more details of this historical edge, go to www.markethistory.com
To view this event in EventEdge, click here.
Ryan Soudan is an analyst with MarketHistory.com.
