Odds for the Dow on 10/26/2010

Today was positive and fell in the 0 to 0.50% range, which was the overall bias of the table published on Friday. One way to trade Friday's table was to take a short trade when the Dow pushed above 0.50%, since the odds did not favor a close above those levels.

I've decided I don't want to punish the stats on "significant high/low" just because the market made a significant high or low and my model didn't have strong odds of it happening. Just by chance, the market is likely to move more than 0.50% on any given day, so I really only want to record times when the odds are highly skewed in favor of a big move and see how accurate the forecast was. In that case, I haven't seen any instances where the odds of a significant high or low was above 70-75%.

Direction: 3/3
Range: 3/3
Significant High/Low: no instances

Here is the data for tomorrow. Only thing of interest here is the relatively high odds of tomorrow's low falling in the 0 to -0.50% range. If I were to use that information to trade, I might sell any gap up tomorrow, or sell at today's close and cover when the market dipped to those levels tomorrow. Strangely, although today's candlestick looks pretty bearish to me, the odds of a big drop tomorrow are fairly low. Only a 9% chance of the Dow closing down more than 0.50%. Were I to short tomorrow at any point, I wouldn't be too greedy if the market does fall for a bit.