[Soultrader]

Stats for the YM; mini-sized Dow ($5)

Here are some stats based on the TRIN at the market close. One strategy is to buy the dow at the close on a high TRIN reading. The idea behind is that the markets are oversold and expect the market to gap up the next morning.

Stats are based on the last 2 years from 2004 May to 2006 May.

When the TRIN closes above 2.0, there is a 64.7% chance that the markets will open higher. This has happened 17 times over the past 2 years.

When the TRIN closes above 1.9, there is 71.4% chance that the markets will open higher. This has happened 21 times over the past 2 years.

When the TRIN closes above 1.8, there is a 69.6% chance that the markets will open higher. This has happened 23 times over the past 2 years.

When the TRIN closes above 1.7, there is a 76.7% chance that the markets will open higher. This has happened 30 times over the past 2 years.

When the TRIN closes above 1.6, there is a 73.2% chance that the markets will open higher. This has happened 41 times over the past 2 years.

When the TRIN closes above 1.5, there is a 70.9% chance that the markets will open higher. This has happened 55 times over the past 2 years.

Do not take this information and blindly buy the Dow Futures contracts at the close. This does not take into account the overnight action. Prices can drop overnight to stop you out then take off to the upside. Therefore, adjust your strategy accordingly. A trader I know will wait until after hours to buy. This allows a better fill at times. Remember, this setup requires a wider stop and depending on your risk tolerance this strategy may not be for you. I usually minimize my position to a quarter size and use a 40 point stop on the dow mini's. Due to the high percentage of the setup, I am able to risk 40 points on a quarter size.