Data &
Technology
Research
Reports
Report Solutions
Reports Library
Actionable
Strategies
Free
Resources
Simple Backtest Calculator
Simple Seasonality Calculator
The Kelly Criterion Calculator
Sentiment Geo Map
Public Research Reports
Free Webinar
Pricing
Company
About
Meet Our Team
In the News
Testimonials
Client Success Stories
Contact
Log inLoginSign up
< BACK TO ALL REPORTS

Another surge as Dow nears 20% threshold

Jason Goepfert
2020-03-26
At midday, we're on track for a 3rd consecutive day with up volume of more than 80%, which has only occurred before further large gains. And the Dow is nearing a 20% gain, which it did not do during other "fakeout" rallies in bear markets.

Maybe this is a jinx given how things turned out on Wednesday, but the continued surge so far today has pushed the Up Volume Ratio above 90% yet again.

Even if we relax before the close, it's likely to least be an 80% up volume day. That would be the third in a row, with at least one of the days being better than 90%.

As we saw in a couple of previous notes, such skewed buying pressure has boded well when it occurs at least once when stocks are down from their highs. It boded extremely well when there were back-to-back days. And it has been perfect when there were 3 in a row.

Granted, anytime we hear about perfection in markets we should be skeptical, especially with a tiny sample size. Based on the history we have, however, this kind of buying pressure, couple with the readings we witnessed coming into the low, bode well for further gains.

One of the popular stats zinging around over the past couple of days has been the size of the daily gains. The most popular take is that the biggest gains only happen in bear markets. Okay, but that ignores any context.

We already saw that when stocks go from a major low to erasing at least a week's worth of losses, it has mostly boded well going forward. In bear markets, the one-day gains might be large, but it's typically not enough to make up for recent losses.

There is a lot of time left to go in today's session, but the Dow is making a charge to a 20% gain off its low in only 3 sessions.

This might be notable. In 2008, there were no 20% bear market rallies - when the Dow did finally rally that much, it only happened on the start of the new bull market. This is kind of splitting hairs, though, since it rallied just under 20% at the end of 2008, which proved to be a very bad time to go long for a trade.

There were also no 20% rallies during the "fakeout" portion of the 1929 crash. By the time it rallied at least 20%, it went on to a total gain of nearly 50% before peaking in April 1930.

In the 1930s, the Dow saw many swings of 20% or more, but right now we're in the initial post-crash phase of a decline, and not the dragged-out bear market which can follow the initial purge and surge.

Sorry, you don't have access to this report

Upgrade your subscription plan to get access
Go to Dasboard
DATA &
TECHnologies
IndicatorEdge
‍
BackTestEdge
‍
Other Tools
‍
DataEdge API
RESEARCH
reports
Research Solution
‍
Reports Library
‍
actionable
Strategies
Trading Strategies
‍
Smart Stock Scanner
‍
FREE
RESOUrCES
Simple Backtest
Calculator
Simple Seasonality
Calculator
The Kelly Criterion
Calculator
Sentiment Geo Map
‍
Public Research Reports
‍
Free Webinar
COMPANY
‍
About
‍
Meet our Team
‍
In the News
‍
Testimonials
‍
Client Success Stories
Pricing
Bundle pricing
‍
Announcements
‍
FAQ
© 2024 Sundial Capital Research Inc. All rights reserved.
Setsail Marketing
TermsPrivacyAffiliate Program
Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Testimonial Disclosure: Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.