Posted on February 13, 2013 by Michael Harris, Price Action Lab Blog.
Since the start of 2000, there have been three 7-week winning streaks in S&P 500, one in January 2011, another in May 2007 and one in January 2004. The first two occurred before corrections and the last one was followed by a year of sideways activity. These observations carry no statistical significance and this time the market response could be completely different. However, it is always good to look at past price action while being aware of the shortcomings and pitfalls of such practice.
The RSI(13) on the weekly chart is currently at levels that have occurred just before short-term corrections took place in the past. However, as I noted before, these observations carry no statistical significance because of their small sample. This time around things may be different as technicals is not a primary phenomenon but a secondary one that depends on fundamentals. It is always good to look at past price action while being aware of the shortcomings and pitfalls of such practice and that technical analysis is more of an art than a science.
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