Price activity and the future

The TraderFeed Blog first got me interested in how short term price activity is not necessarily random as I had expected. Like a point guard who goes right or a center who pump fakes, the market does seem to have predictable tendencies. The theme of many of the TraderFeed articles on this topic reinforces contrarian aspects of price behavior - that going against the crowd has rewards.

Here's a good article on how 20 day highs in down markets tend to be followed by subpar returns, while 20 day highs in up markets aren't much to worry about. 20 day lows in down markets tend to be followed by strong short term returns.

Here's another similar article looking at similar themes put in different time periods.

The theme for index moves - be contrarian and buy the lows. Now I'm not ready to expand this to individual stock selection and I may do some similar investigation on individual stocks, (I actually expect that an individual stock going down is probably more likely to keep going down, or at minimum exhibits more volatile tendencies - so we need to be careful with interpretation - but at least in aggregate the market has a reversion to the mean tendency.