Now, if the daily values were completely random, and yesterday's values didn't influence today's values, you'd expect to have:
The other day I was staring at the 5-day chart of a stock and noticed that, when today's Open is higher than yesterday's Close, it often dropped, ending the day down from the Open.
See the chart?
There were a couple of days when Open was greater than previous day's Close and Close was less than the Open.
>What's pOpen and ...
Them's the previous day's Open and Close.
[A] Open > pClose AND Open > Close
occur about 25% of the time since there are two inequalities and they could be: > > or > < or < > or < <.
If we expect they're equally likely, then each should occcur about 25% of the time.
>Don't tell me! You've got a spreadsheet, right?
Yes ... and it looks like this:
Note the following:
>Looks like that 25% is bang on, eh?
- You stick some condition into cell F3, like AND(Open > pClose,Open > Close). (That's the condition in [A].)
- You enter a gaggle stock symbols in column N.
- You click a Download button and you get 5 years worth of daily stock data for all stocks.
- For each stock, the percentage of times the condition is satisfied is noted (in column O).
- If you like, you can change the condition in F3, click the Change Condition button and download the stocks again.
Uh ... yes, for that particular condition.
However, you can type in other conditions, for example:
>So I can use four values for today, namely Open, High, Low and Close and I can use ...
|Condition||the Meaning of the Condition
|AND(Open < pOpen, Close < pClose)||Today's Open is less than the previous Open AND today's Close is less than the previous Close
|OR(Open < Close, Close < pOpen)||Today's Open is less than the today's Close OR today's Close is less than the previous Open
You can use the previous Open, High, Low and Close. You can also use AND or OR.
You just type the condition into cell F3, click the click the Change Condition button and download the stocks again.
Come to think of it, you can also use Volume and pVolume, just in case that's of interest.
You might try, for example:
[B] Open*Volume > pOpen*pVolume AND Close > pClose.
>And do you always get something close to 25%?
Don't know. I only tried a few conditions. However, why don't you just click on the picture of the spreadsheet to download it ... then play.
I might point out that you can use more elaborate conditions, like the following (each of which might give something like 50%).
There are only four possibilities ... and each of the two conditions below cover half of them:
>And did you check it out ... I mean the 50% percentage?
Yes, for about 60 stocks and it gave me 46.2%:
>So, have you found any condition that gives you a winning investment strategy?
|In fact, I tried this one ... thinking that momentum may be at work for some stocks:
[C] OR( AND(Close > Open, pClose > pOpen), AND(Close < Open, pClose < pOpen) )
>Uh ... what's that say?
It looks for stocks where, if the price goes up (or down) one day, it goes up (or down) the following day.
>And you got ... what?
Close to 50%, as usual.
Two of four possibilities
>So why do you think the spreadsheet is useful?
Did I say it was useful?