This week has been a roller coaster ride for the market. Nasdaq-100 Stock Index Futures (CME.ND) sky-rocketed 13.7% on Monday with the aid of the treasury plan only to fall -6.3% and -10% on Tuesday and Wednesday, respectively. And then rallied 7.6% on Thursday to close at 1323. Despite the 'big'* gain, ND dipped down early in the session to cross below its 52-week low; sinking to an intra-day low of 1190. Will we see more lows in the near future?
* One-day percentage gain is more than one standard deviation stronger than the average one-day percentage change measured over the last 30 trading days.
Q: How has CME.ND performed in the past, omitting repeat occurrences within 10 trading days, when it has traded at a 52-week low but recorded a 'big' gain on the day?
A: According to the eight previous occurrences of this event, EventEdge indicates that CME.ND has shown a strong bearish edge that peaks six trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Thursday, Oct. 16, 2008) is Friday, Oct. 24, 2008.
CME.ND declines in 100% of the cases (8 of 8) by an average of 5.1% relative to the close on the event date. Which, based on the close of CME.ND on the event date (1323), provides a target price of 1255.53.
To view this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
