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A Picture Is Worth A Thousand Words
Author: James Brumley (info)
Website: http://bluegrassportfolio.com
Posted: July 30th, 2007 at 12:53 pm EST
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Still catching our breath from one of the worst weeks in years, as promised in the Weekly Market Outlook on Saturday, today we’re going to show you a couple more things that suggest a bounce may already be in the works.
Not a lot of words today….we think the pictures speak for themselves -and say things a lot better than anything we could write. We do, however, have to offer this preface…
There comes a point when things literally can’t get much worse. That time may have been late last week. Our ‘worse’ today is being measured by broad market dynamics like new highs and new lows, breadth, and depth. As you’ll see, those dynamics got so bearishly out of whack last week, we’re actually wondering if it’s time to be a buyer. Take a look and decide for yourself.
Anyway, the last time we saw the new NYSE stock ‘new low’ number hit anywhere close to Thursday;s reading of 398 was May of 2004. Before that, it was July and October of 2002. In all three cases, the market bounced sharply (and for two of them, we were still very much in a bear market).
S&P 500, with NYSE New Highs Versus NEW Lows - Weekly
Thursday’s ‘down’ volume for the NYSE was of epic proportions as well. The last four times we saw it that high was July of 2002, April of 2005, January of 206, and just mid-June of this year. All four instances were bullish events, though some more than others.
S&P 500, with NYSE ‘Up’ and ‘Down’ Volume - Weekly
The final look we’ll take at the NYSE’s ‘dynamics’ data is in the number of advancers compared to decliners. This data is not as high-powered as the first two data sets, as both of these numbers can be erratic, and not necessarily interpretive of the bigger picture. All the same, Friday’s 2310 decliners and only 1008 advancers is consistent with a short-term bottom.
S&P 500, with NYSE Advancers & Decliners - Weekly
And what about the NASDAQ’s data? We’ll put that out here too. No commentary, as the premise is the same - historically, too much of anything usually brings things to close.
NASDAQ Composite, wioth NASDAQ New Highs Versus NEW Lows- Weekly
NASDAQ Composite, with NASDAQ ‘Up’ and ‘Down’ Volume- Weekly
NASDAQ Composite, with NASDAQ Advancers & Decliners - Weekly
All that being said, we never say never….there’s the possibility things really could move even lower before they go higher again. However, we did want to show what has historically happened when things got to the degree they did late last week. Only time will really tell, but we’re more inclined right now - based on what we’ve seen and know - to look for an upside move. Maybe it won’t happen today, or even tomorrow, but we’d guess soon. Stay tuned.
By the way, if you missed Saturdays Weekly Market Outlook, you should really go back and read it too. It has some specific level to watch.
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Investing, James Brumley, Trading
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