Wednesday, October 19, 2011

Against All Odds

Since 1995, the $SPY has closed below the 20SMA for the month only TWICE. Yes, you heard me correctly, twice. Both times it did, we got a small retest of the 20SMA monthly, but never closed the month above it, and declined over %50 percent both times. Again, after closing below the monthly 20SMA, we havent closed above it again before declining at least 50 percent before we recovered. This past September, we closed the month below the monthy SMA20 for the third time since 1994. Now, odds would say that we will not close above that 20SMA before we take a 50 percent haircut at least. But if we hold out gains through the rest of October, we are for the very first time in almost 15 years, closing above the 20SMA on the monthly even after closing below the monthy 20SMA the month before. Needless to say, the fact that the market is trying to recapture that monthly 20SMA before a decline of any significance ( let alone 50 percent) shows some unusual strength

No comments:

Post a Comment