S2N spotlight<\/h2>\n
Today we will focus on META for a more comprehensive look. If you haven’t worked out by now, I am a very punny guy. I love dropping them. META has been up an incredible 20 consecutive days, the most for any of the magnificent 7 companies.<\/p>\n
<\/a><\/p>\n I guess before we continue the spotlight, I might as well unpack how rare this is. If we were talking a normal distribution in the truest sense of the word, i.e., with an average of 50% up and down, then getting 20 up in a row would be a one in a million probability.<\/p>\n However, anyone who has worked with financial time series will know that they are not so normal. Stocks<\/a> have memory, at least more than my grandmother towards the end. Let’s get the Geeky stuff out of the way. I have added the results of 3 normality tests to the chart. META is not normal; then again, who is these days? I would likely fail all 3 tests myself.<\/p>\n The bottom line is META has up days on average 52.5% of the time. The probability of getting 20 consecutive up days with our non-normal distribution is 1 in 389,000. That was a wordy way of saying this is rare.<\/p>\n Take a look at the distance of the current price from its 200-day moving average. 33% is bigger than anything we have seen in the past. A gap like that could easily swallow an X. Shots fired Elon.<\/p>\n Let us take another look at how far META’s share price has moved. It is about to hit the 3 standard deviation upper Bollinger band. This has only happened twice in the past. I share a strategy below that trades such extremes. You would be better off never trading this strategy if you want to make money and avoid dying of boredom waiting for a signal that turns out not to be as good as you would think.<\/p>\n Let us go a bit deeper. This strategy looks for a more short-term overbought strategy with a 100-day RSI above 95. This has only happened 3 times. We got the 3rd signal last week. If you sell now and hold for a month, you would lose money.<\/p>\n With all that I have said, I have shown we are in a very rare overbought situation. I would certainly look to short META for a few days with this current overbought setup. The probability of more consecutive up days is getting exponentially more unlikely, favouring a short. The trader in me is keen; this is not financial advice.<\/p>\n I have said on a number of occasions that I think the S&P 500 will end the year below where it started the year. We are close to another all-time high. As you can see below, the market breadth is still positive, with more than 50% of companies in the S&P 500 above their 50-day and 200-day moving averages. We are likely to see some more upside during the week. The US markets are closed today.<\/p>\n The Chinese Renminbi has a rare 3-sigma up day on Friday. The return may have only been 0.49%, but the Z-Score tells us this is rare given its history of 31 years. Tarriff wars are fast becoming currency wars.<\/p>\n For those who are new to the letter, the shading is\u00a0Z-Score adjusted\u00a0so that only moves bigger than usual for the symbol are highlighted.<\/p>\n![\"Chart\"](\"https:\/\/editorial.fxsstatic.com\/miscelaneous\/Chart-638753646812105006.png\")
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<\/a><\/p>\nPerformance review<\/h2>\n
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