Probable Continued Sell Off in Stocks 5-5-22

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It is very rare to have any combination of underlying price factors which produce an extreme negative skew in forward returns in my experience.

But based upon today's market action I looked .....

Criteria:

• Yesterday SPY was up >2.5%
• Today is down more than 3%
• Price is below 200 day moving average

This basically shows a big flip flop in price in the context of a down trend.  

There are not many instances, but the past instances show a high probability of a continued decline with a 4:1 maximum loss compared to gain over the next 5 days.

There was also a high probability of 2 or more closes down in a row over the next 5 days.

9 out of the 11 instances showed maximum losses of over 4.9% or greater over the next 5 days.  

This scan was not adjusted for volatility.  So understand that there could a large increase in volatility over the next few days.