The S&P 500 index (SPX) saw three 'big' one-day declines last week, and settled down a 'very large' 3.5% over the five day period ending Friday.
The index has fallen sharply starting Tuesday, and again on Wednesday after opening the week strongly with a new 13-week high on Monday.
Q: How has the S&P 500 index fared after seeing at least two 'big' one day declines in the week before the Memorial Day holiday?
A: According to the 17 previous occurrences of this event, EventEdge indicates that SPX has shown a weak bearish edge that peaks one trading day after the event- which in this case would be the move from today's (Friday's) close to the close on Tuesday. The SPX index declines in 82% of the cases (14 of 17) by an average of -1.8% relative to the close on the event date. The average of the three rallies is 0.4%. The overall return of the 17 cases is -1.4%.
Editor's Note: This trading idea was first published at noon on Friday around noon. The index rallies a bit from there, closing at 1375.93, down -1.3% for its third 'big' decline in the week.
Further analysis on the index can be done using our EventEdge® tool.
Anthony Kolton is president of Logical Information Machines and Markethistory.com, Inc.Gibbons Burke is editor of MarketHistory.com.
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The Dow Jones Industrial Average - Continued Weakness Out of the Holiday - May 27, 2008
