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Never underestimate the power of momentum on Wall Street. Since 1950, every penny of gains in the S&P 500 has come on days following 0.64% up moves. That happens roughly once every five market days.

In other words, if you invested only on days following 0.64% up days, and sat in cash the other 81% of the time, you would have easily beaten the market.

Warning: I'm not advocating such a strategy. That's your classic sinkhole of back-testing. I merely want to show you how trend sensitive Wall Street can be.

Posted by edelfenbein at February 5, 2008 1:49 PM