TSLA next-day behavior after 3+ day streaks (up vs down) — last ~3 years
TSLA’s short-term “hot hand” looks more like noise than a rule. We measured next-session returns after runs of three or more consecutive up or down daily closes over the last ~3 years, classifying each following day as continuation or reversal. After 3+ up-runs the next session continued only about 47.8% of the time, and the difference versus the unconditional next-day return carries a high p-value (≈0.78), consistent with sampling noise rather than a dependable edge.
Long down-streaks show a larger average bounce, but event counts are modest and some exact-length buckets are small, so apparent edges are fragile. The full analysis below provides the exact counts, means, t-tests and charts supporting these conclusions.
For TSLA over the past ~3 years, after a run of three or more consecutive up (or down) days, does the next session continue the streak or reverse it? Thesis: long streaks mean-revert — next-day returns fade to flat-to-negative after extended up-runs while long down-runs see above-baseline bounces — so the short-term 'hot hand' is an illusion and chasing the streak doesn't pay.
How this was measured
Resampled TSLA minute bars to daily closes, computed close-to-close returns, and identified consecutive up and down streaks (strictly >0 or <0 daily returns; zero-return days break streaks). For each day where the current streak length was ≥3, recorded the FOLLOWING session’s return and classified it as continuation (same sign as the streak) or reversal (opposite sign). Summarized continuation/reversal rates and mean next-day returns for 3+ up-runs and 3+ down-runs, compared each to the unconditional next-day baseline via Welch’s t-test. Also reported exact-length buckets (3, 4, 5+) for both directions.
The key numbers
Reading the numbers
Baseline next-day return was about 0.1697% (N=751). After runs of 3+ days, up-runs (N=90) averaged ≈0.2836% but p=0.7800 → no statistically-clear difference; down-runs (N=78) averaged ≈0.6325%, a bigger bounce on average.
The charts
This bar chart lines up continuation versus reversal after 3+ day streaks. The reversal bars are slightly taller for both cases — up-runs reverse 52.22% of the time versus 47.78% continuation, and down-runs reverse (bounce) 53.85% versus 46.15% continuation. That signals a mild tendency to flip the next day after long streaks, but the rates are close to 50/50, so any streak-following edge is weak.
The histogram of next-day returns after 3+ up-day runs (n=90) shows a mean next-day return of 0.002836 (0.2836%) with values spread from a minimum of -0.0913 (-9.13%) to a maximum of 0.109 (10.9%). A lot of the mass sits near zero with both gains and losses, and given the reported p=0.7800 versus baseline, this small positive mean is not statistically-clear evidence of a persistent hot hand after long up-runs.
The histogram after 3+ down-day runs (n=78) has a mean next-day return of 0.006325 (0.6325%) and ranges from -0.0637 (-6.37%) to 0.1591 (15.91%). Compared with the up-run histogram, this distribution shows more positive next-day outcomes on average, consistent with a bounce following long down-streaks, though the sample size is modest so the result should be viewed as suggestive rather than definitive.
Next-day outcomes by streak direction and length
| direction | run_len | N | mean_next_ret | continuation_rate | reversal_rate |
|---|---|---|---|---|---|
| Up | 3 | 47 | 0.0005 | 0.4468 | 0.5532 |
| Up | 4 | 21 | 0.0092 | 0.5238 | 0.4762 |
| Up | 5+ | 22 | 0.0017 | 0.5 | 0.5 |
| Down | 3 | 42 | 0.0036 | 0.5 | 0.5 |
| Down | 4 | 21 | -0.0008 | 0.4286 | 0.5714 |
| Down | 5+ | 15 | 0.024 | 0.4 | 0.6 |
The takeaway
No — there is no reliable short-term "hot hand" in TSLA after 3+ day runs; the next session does not consistently continue streaks. After 3+ up-runs (N=90) the continuation rate is about 47.8% vs a 52.2% reversal rate, with mean next-day return 0.2836% compared with the unconditional 0.1697% baseline (Welch p = 0.7800). After 3+ down-runs (N=78) the next day reverses (bounces) about 53.8% of the time, with mean next-day return 0.6325% vs the same 0.1697% baseline (Welch p = 0.3458). Put plainly, the p-values correspond to roughly a 78-in-100 and a 35-in-100 chance, respectively, that those differences are just noise — not a statistically-clear signal. Event counts are modest and some exact-length buckets are small (e.g., 21 events for 4-day up-runs), so any apparent edges are fragile. Practical takeaway: don’t count on multi-day TSLA streaks as a reliable next-day trade; you might see a mild bounce after long down-streaks, but the evidence is too noisy to trade confidently.
The fine print
- Longer-streak buckets are thin (example: only 21 events for 4-day up-runs), so bucketed rates are noisy.
- Overlapping streaks create serial dependence and inflate the effective sample size.
- Zero-return days are treated as streak breakers; other tie rules would slightly change counts.
- This uses close-to-close returns only and does not control for news, day-of-week, or volatility regime.