Odds for the Dow on 10/11/2010

Category	Prediction Rate	% Correct	Notes
Direction	12/15	80%	14/15 disregarding minor closing range
Range	9/15	60%	13/15 disregarding minor closing range
Significant High/Low*	no instances
Unfilled Gap**	1/3	33%	Testing tomorrow
Next Day Gap**	2/3	66%	Testing tomorrow
Gap Fill+	1/1	100%

* A significant high/low occurs when the market makes a move greater than 0.5%. This test is measuring the following case: If the odds of a significant high/low are >= 70% in either direction, a significant high/low was made the following day.
** An unfilled gap occurs when the market gaps and never fills. The next day gap determines if the condition correctly predicted the gap.The unfilled gap and next day gap tests are measuring times the odds of a positive low or negative high were >= 14%.
+ When the odds of a negative high/pos low <= 3% and the market gaps in the low odds direction, the gap fills.

Test results:

• Since the odds of a negative high >= 14%, does the market gap down and never fill the gap? NO
• Since the odds of a negative high >= 14%, does the market gap down tomorrow? NO

Both tests failed so I'll continue to track it, although the high "negative high" figure could have been the hint that the market would drop lower in the morning. I think the unfilled gap test is going to be thrown out. It doesn't appear there's an edge to be gained. If the next day gap can stay above 50%, it's probably worth betting on, or at least, if you're in a position, it re-affirms that you should stay in that position.

Looks like a bounce is coming before another (possibly deeper or equivalent) pull-back. I'd look to get short back at the old highs if the odds turn negative again. I'm personally waiting till a sample size of 20 before saying for sure whether this works or not. It appears to be on the right track to get to 20 samples with good results.

Tomorrow's tests:

• Since the odds of a positive low >= 14%, does the market gap up and never fill the gap? 
• Since the odds of a positive low >= 14%, does the market gap up tomorrow?