Today the S+P defied expections for price weakness, and instead shrugged off weak Russel and Naz performance by closing up 9 points.
More importantly it gave a daily close above our adaptive 4 channel high - This trend indicator factors in price attributes and volatility and is then weighted - By design, we don't expect to see many finishes above this channel line. Out of 141 trading days this year, ES has closed above the 4channel 36% of the time - Price distribution 5 days forward is actually quite bullish.
Just eyeballing this chart you can see that almost each close above the 4day, sees a higher high within the next few days.
Looking at all closes above the 4day channel in 2018, shows that 5 days forward the 70th percentile move advances 19 points while declining only (9.25) for better than 2:1 odds - significantly higher than baseline odds for 2018 which are 1:1 on a rolling 5 day period.
Interestingly, there is some price under-performance 20days forward with 70th percentile advances of 34.75 versus declines of (43.75) for odds of 5:6 in bears favor.
This tells us 2 things:
1) It's another data point pointing to a imminent 40-50 point decline we are looking for.
2) It's very possible that we are early on our short bet, so we must respect the 2825 stop on close and look to re-enter this short from higher levels.
Stick to the plan - Over a large enough sample size the trading edge will be realized.