Two solid days of gains after setting a 52-week low could give the bears a short-term confidence boost as we discover in today's small-sample bearish record. QQQQ closed at $33.20 with an inside day on Monday, up $0.90, for a 2.8% gain.
Q: Over the course of its history, how does QQQQ perform after two consecutive up days, with up closes, following a 52-week low?
A: According to the seven previous occurrences of this event, EventEdge indicates that QQQQ has shown a very strong bearish edge that peaks five trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Monday, Oct. 20, 2008) is Monday, Oct. 27, 2008. QQQQ declines in 100% of the cases (7 of 7) by an average of 8.8% relative to the close on the event date. The overall return of the seven cases is -8.8%, which, based on the close of QQQQ on the event date ($33.20), provides a target price of $30.28.
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Mr. Jay Pasch is a private futures and equities trader based in Minnesota. He may hold positions in the instruments mentioned in his trading ideas.
NASDAQ-100 Stock Index Futures - Flying the Yellow Flag - October 21, 2008