Short-Term Trends

10 Day High/Low System

The 10 Day High/Low system works on the simple principle that when the markets are at 10-day relative highs or lows, the trend will change direction, at least temporarily. a 10-day low happens when the close is lower than the close of the last 10 days and usually results in a strong bounce in prices within 5 days. A 10-day high happens when the close is higher than the close of the last 10 days. It’s results are a little more erratic, but often means that the index will be down or at least flat for the next week.

This shows the chart of the S&P 500 (SPX) with the 10 Day Low instances marked in Blue and the 10 Day High instances marked in Red. At the bottom of the chart you will see a rating that shows how close the SPX is to either the 10 Day High or Low. If the Blue line reaches the 10, that is a 10 Day Low and if the Red line reaches the 10, that is a 10 Day High. In the chart, “LX” means “Long Exit” and “SX” means “Short/Sell Exit”.

Major Moves System

Generally, days that see major moves (larger than 1% in either direction on the SPX) have a large statistical impact on the movement of the next few days. When the SPX makes a large upward movement, the next few days are often stagnant or trend downward. The opposite is also true, when the SPX makes a large downward movement, then the next few days are often stagnant or trend upward. These effects become greater with larger moves, so 2% moves have an even stronger effect.

The chart below shows the SPX with all days that have a move greater than 1% marked. If it is an upward movement, it has a red arrow, downward movements have blue arrows. At the bottom of the chart you will see a subchart that shows the percentage movement of each day. Gaining days are shown in blue while losing days are shown in red.