Yesterday's Weblog entry noted that we were at a tipping point with stocks at multiweek lows; oil, gold, and interest rates at or near highs. Well, the market tipped as oil rose--and that puts us down 1.7% in SPY over a three-day period. So I decided to look at what happens after days like today, in which we're down more than 1% in SPY on a three-day basis, with total declines exceeding total advances by more than 4000 issues.
Interestingly, since March, 2003 (N = 779), we've only had 10 such occasions. It is also interesting that there is only a modest bullish bias to this small sample. Three days later, the market is up on average by .27% (6 up, 4 down). This compares to the average gain of .18% (457 up, 332 down) for the sample overall. The reason we're not getting more bullish readings is that broad market declines tend to continue in the near term before reversing. More in tonight's Weblog.