Multiple Inside Days

inside SPY

What an unusual candlestick pattern we have in the S&P500 over the past few days! Now, I don’t much go for candlestick patterns as a predictor of anything, but I thought it might be fun to take a look at this.

Three ‘red’ days in a row (close below open), yet the close and opens of the most recent two days are enclosed within the big bar before them. Some might define “multiple inside days” as bars that are confined within the high and low of a larger bar, but whatever. It’s still pretty unusual, don’t ya think?

In fact, since the SPY ETF has been trading since 1993, this has only happened 13 other times. And it seems to be happening less and less.

What happens after this odd bar combination? What crazy predictive value does this bar pattern have? Well the results are good, for what it’s worth. From the close of this the third bar, most of the 1-day and 2-day moves (from close to close) have been positive. Here’s a table:

Date/Time 1day G/L % 2day G/L %
4/6/1993 0.28 0
7/1/1993 -0.56 -1.67
10/21/1993 -0.54 -0.27
5/13/1994 0 1.69
5/16/1994 1.69 2.25
7/17/1996 1.57 0.79
11/26/1997 0.13 2.75
12/24/2001 0.55 1.16
1/30/2004 0.43 0.26
12/21/2005 0.52 0.58
12/19/2007 0.63 1.54
6/24/2009 2.17 1.91
1/26/2010 0.48 -0.68
7/1/2015 ??? ???

What does this all mean? Well, probably nothing much. Other than that I might have too much time on my hands.

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