IWM higher highs

I looked at days when the high of the day was above the prior day’s high.  Looking at IWM data, about 52% of the days had higher highs then the previous day.  The third row is a sequence that starts with a lower high, then has a higher high.  The second column is number of days with a higher high, and third column is number of days with lower high, the fourth column is column 2 / (column 2 + column 3).  The last row is a sequence of lower high, followed by 2 higher highs.  You still have about 58% of the times having a higher high.

higher not higher higher %
total 1276 1158 52%
higher 317 225 58%
2 higher 185 132 58%

I also looked at the prior day’s close in relation to the 5 day simple moving average (SMA) to see the chances of having a higher high, and found:

new high not higher
close above 5 sma 846 467 64%
close above 5 sma 430 691 38%

Which seems to indicate if the close is above the 5 day SMA, then 2/3 of the time it will have a higher high the next day, which is better than the 52% anytime percentage.
Similarly looking at the open in relation to the prior day’s 5 day SMA, if the prior day had a higher high:

new high not higher
open above 5 sma 661 331 67%
open below 5 day sma 73 211 26%
open above 5 sma, below prior high (included in row2) 405

The last row is the number of times IWM opened above 5 day SMA, but below the prior day’s high. In other words, 256 times the open was above the prior day’s high (out of a total of 1276 days where the previous day had a higher high).

The conclusion I draw from this is that if the open (or prior close) is above the 5 day SMA, then the high of the day prior day is a good upside target.  On the other hand, if it opens below the 5 day SMA, you should not target the high.

Remember,  this is a study of higher highs, and gives not give any indication about the day’s close.


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