The index is rising on news that the Obama's administration is preparing to absorb toxic bank assets. Next line of resistance is 866. Let's see if 844 now acts as support.
24 Hr. Globex Pivot: 839.25
Day Session Pivot: 840.25
Largest 10-Day Avg Distance From 0930 ET Open: 21.98
Largest 10-Day Standard Deviation: 8.97
Smallest 10-Day Avg Distance From 0930 ET Open: 6.65
Smallest 10-Day Standard Deviation: 4.91
In addition to using Relative Volume as described by Dr. Steenbarger in his recent post, you can also use a statistical analysis similar to the one that I have been using to show how far the market typically moves from the 0930 ET open. Instead of analyzing the largest distance from the open, analyze the smallest distance the market typically moves from the 0930 ET open. This is what is shown in the chart above.
As was described in an earlier post titled "Statistical Open Range and SpreadSheet Analysis", 70% of the time the open will be a lot closer to one range extreme than the other. In Tuesday's market, the market spent most of the morning within a narrow range limited by the statistical 10-day smallest distance from the open. The market never did trade beyond the +1 Standard Deviation in the positive direction of the open. The market will have a higher probability of trading to the largest distance from the open if it trades beyond the 10-Day 1 Standard Deviation of the smallest distance on above average volume.
Charles
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