After the market’s worst week of 2019, what’s next?
Below, Victor Castroll has some historical data about what happens when the S&P 500 ends a week with three really bad days in a row. But first, here are CNBC’s options traders Friday doing a post-mortem on what they call a “wild Apple trade”:
Finally, friend of the blog TraderVic, who last week predicted weaker Q4 guidance from Apple than we got ($60-62B versus $61-64B), offers as consolation a spreadsheet he found on Reddit:
Last week, the S&P 500 suffered three straight days of losses from Wednesday to Friday better than 0.70%. The chart above shows the last 25 historical occurrences of this. Tthe first column shows the date of occurrence. the second column shows the result of the following Monday. The third column shows the return over the following 4 days (week). But what’s most interesting is column 4. Column 4 shows that in 24 of 25 occurrences, (96%), the stock drew down during the week and the AVERAGE drawdown was over 3%. so, this tells us the historically, we can expect the market to be down at least 3% at some point this upcoming week. Happy trading!
Disclaimer: Having never owned or traded Apple, I have nothing to add. Don’t blame me if you drain your IRA doing something you read about here.