Thursday, April 05, 2007

The Day After

Actually it should be the day after the day after because I did a very quick study this morning regarding the reaction of the market to a single day large increase and discovered, as I expected, that the next day (that would be yesterday) was generally up but only by a little bit and the next day plus 1 (that would be today) was down a significant amount.

However I ran the study though three days and found that the next day after the day after plus 1 (that would be Monday) is generally a significantly higher up day.

So if the pattern holds - today will be down by some amount and Monday will be up by enough that when taken with yesterday's gains it will almost counteract any downside that we might get today.

I say almost counteract because the other thing I discovered is that the sum of the three days after a large up day is generally a bit on the negative side but not of a significant nature.

Needless to say these are prognostications off the back of an envelope and even though President Lincoln's best speech was written on the back of an envelope that does not give envelopes any special powers of foresight or anything else. So don't do any financial planning based on my ramblings here - just watch your step which you always do anyway.

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