Seasonality looks neutral. If SPY closes above today’s open and today’s volume is lower than yesterday’s one, the following BULLISH patterns will trigger:
49-89-131-140-302 – and Profit Factor system (164)
If SPY closes below yesterday’s close the following BULLISH patterns will trigger:
7-58-59-61-61-63-64-65-89-107-140-178 – and Profit Factor system (164) and Bollinger Band system (163)
I will enter LONG if one of these two situations occurs.
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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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NIGHTLY PATTERNS - Overnight Trading
At the moment it is 35 min before the close. Barring nuclear war or a flash-crash or something, SPY will clearly close higher than the open, so the second scenario will not occur.
As for the first scenario, volume right now is only about 79 million, and yesterday it was 111 million. It therefore looks very likely that today’s volume will end up being less than yesterday’s, and the first scenario will apply.
So it appears very likely that a long signal based on the first situation (higher close but less volume) will indeed occur.
Terry
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Perfect Terry… It’s like that. Let’s hope the edge to work!
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