S&P 500 Index Futures (CME.SP) dropped 2% on Monday to close the session at 1266.4. The decline came on a 'trend day' down pattern, where the open was in the upper 20% of the day's intra-day range while the close was in the lower 20%. The 'big' decline resulted in S&P crossing below its 50-day moving average after it had crossed above it on Friday. S&Ps usually makes a full recovery in a week after such bearishness on a Monday.
Q: How has CME.SP performed in the past when, on Monday, it crosses below its 50-day moving average on a 'trend day' down pattern?
A: According to the 13 previous occurrences of this event, EventEdge indicates that CME.SP has shown a very 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 current event date (Monday, Aug. 25, 2008) is Tuesday, Sept. 2, 2008.
CME.SP rallies in 92% of the cases (12 of 13) by an average of 3.2% relative to the close on the event date. The average of the one decline is 0.8%. The overall return of the 13 cases is 2.9%, which, based on the close of CME.SP on the event date (1,266.4), provides a target price of 1,303.13.
To view this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
Related Ideas:
Stocks - Declines on the Monday Before Labor Day - August 26, 2008
S&P 500 Index -Mondo Monday - August 26, 2008