Seasonality looks NEUTRAL.
If we see today’s close above today’s open the following BULLISH patterns are triggering:
7-55-58-70-100-101-107-158-233
If we see today’s close below today’s open the following BULLISH patterns are triggering:
7-55-58-61-62-70-107
In both situations there is enough BULLISH evidence to have a LONG trade at the close for tonigh through the weekend.
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This mathematical effect goes back to its discoverer Claude Shannon:
Markowitz portfolio theory is entirely based on the Shannon's Demon Effect: a portfolio of financial instruments or trading systems can beat the average return of all its components only if their correlation is low or, even better, is negative.
These computational effects are also stronger the often the portfolio is rebalanced.
This incredible edge coming from diversification can even transform a two systems portfolio with negative returns in one single low correlated and frequently rebalanced porfolio with a positive average return.
In this file:
I show how overall results are boosted by Shannon's Demon with 3 simple strategies that are rebalanced daily. One buys long each night from close to next day's open, one from close to next day's close and one from open to close (intraday). It is clearly evident how much overnight trading has a low correlation with other time frame strategy proxies and why it should be included in a trader's portfolio.
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Marco Simioni
NIGHTLY PATTERNS - Overnight Trading
Interesting that both a positive and a negative day are bullish for the weekend. Do you have a sense of how unusual this sort of setup is? And, thanks for the update.
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You are right, I think this is due to the strange behaviour of past few days with many gaps up un down, on general downside direction and many closes below each days open. When I test new patterns I try not to be focus only on the intraday down close bias otherwise if it stops working and I rely only on it, there will be problems…
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Makes sense, Marco. Good luck to those who took this trade, and enjoy your weekend.
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