The time frame for the above chart of the delta (Today's Close - Yesterday's Close) is from 3/11/08 to present, and is based on the 0930 ET to 1600ET market hours.
The only real conclusion from this data is that the market seldom advances relative to yesterday's close more than 4 days in a row. Just a 1 day advance occurred 47% of the time, 2 day advance was 13%, 3 day advance was 20%, and a 4 day advance was 20%.
A 1 day decline occurred 53% of the time, a 2 day in a row decline was 33% and a 3 day decline was 13% during the charts time frame.
Before the market changes direction, it typically will test the last pivot point before reversing. The best indication is to look for divergences between the futures, and the equity market indicators such as the $TICK, $TRIN, NYSE Advance - Decline Line and the 15 SPDR Stock Stochastic. Dr. Steenbarger's Money Flow indicators are also good to use. You should also be aware of where the market is currently located relative to recent market activity; such as is the market testing a 50% correction level of a previous swing wave, or is it in the middle of forming a new swing wave.
Another conclusion is that the market seldom travels in a straight line. You always have mini-cycles as part of a larger cycles that is part of even larger cycles.
One of the best at interpreting waves is Ray Barros. Haven't read his book, but enjoy his "Blog for Trading Success".
Charles
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