6 replies to this topic

[A-ha]

Now forget about all the bear market stuff I told you for months and just think about this: We had three %90+ down day in about 2 weeks....remember those three %90+ up days during the summer sell off.... didnt they lead 250 SPX points rally in 6 months? Now I am asking you: Based on the fact that these clusters of %90+ days historically almost always led to significant market moves in the direction of the trust days over the intermediate to long term, will you still ignore the possibility of a bear market, even a short one? I am just pointing out a simple pattern, a sign that any normal individual with little objectiveness should now sit and think about.

[arbman]

xD, the Fed did not even hint about a rate cut so far, why is that? Apart from the USD woes, I think they want to prune the bad credit out of the system now before it becomes a bigger problem. They pushed tremendous liquidity last year via the permanent repos while keeping the rates up, they could very well not push any repos and let the markets correct to a point that they could cut the rates. They prefered not to. The housing was very much overextended and I think they are hoping to prevent a business environment meltdown while deflating the bubble gradually... So, my impression is the Fed is looking to lower the rates once the next 150-200 points rally in the markets will not come back to the same problems related to the abused consumer credit. Will it work? Even if the business environment stays sound during this period, meaning no recession, I suspect the participants will eventually overreact and provide great entry points for the buyers... - kisa

[LeroyB3]

I guess I'm going to have to ask what your definition of "bear market" is then. Do you have any examples for us where these 90% Down Days have led to Bear Markets? My objectivity can be swayed by facts, not just by statements made on the internet by someone I don't know...some examples please. Best, LB

[Tor]

From Lowrys: sorry the table cannot come out properly. FOOD FOR THOUGHT One of the many unique indicators on our Lowry onDemand website is the percentage of Lowry stocks trading above their 10-day moving averages. This indicator has proven to be very helpful for our clients in measuring the short term extremes of market selectivity. Its accuracy in identifying worthwhile intermediate buying opportunities from time to time has also been especially helpful. That is, a number of significant buying opportunities have been identified in the past after periods of market weakness have caused the percentage of stocks above their 10- day moving averages to drop below 10%. For example, as a result of the recent intense stock market drop beginning on February 27th, the 10-day % indicator dropped from its early-February’07 peak of 84.6% to a low of just 3.77% on March 5th, reflecting a deeply oversold market condition. The table below lists all similar cases since 1990 in which the percentage of stocks above their 10-day moving averages has dropped below 10%, and the resulting market action, as measured by the DJIA, over subsequent 2 weeks, 3 months, and one year periods: Date Lowest Level DJIA % Change 2 weeks later DJIA % Change 3 months later DJIA % Change 12 months later Aug. 23, 1990 1.93 + 5.5% + 2.30% + 21.1% Oct. 11, 1990 9 + 5.0 + 5.8 + 25.9 Nov. 19, 1991 9.75 - 0.7 + 11.9 + 8.9 Apr. 4, 1994 4.06 + 0.8 + 1.7 + 16.0 July 16, 1996 6.14 + 2.3 + 12.2 + 48.8 Oct. 27, 1997 3.07 + 5.5 + 10.5 + 16.8 Aug. 31, 1998 4.71 + 6.4 + 20.9 + 43.6 Sep. 21, 2001 4.51 + 10.7 + 21.8 - 4.4 July 23, 2002 1.89 + 7.4 + 10.9 + 19.4 Sep. 24, 2002 5.55 - 2.4 + 10.6 + 22.7 Jan. 27, 2003 4.94 + 0.9 + 6.0 + 32.8 Mar. 12, 2003 7.13 + 9.0 + 21.6 + 34.1 May 10, 2004 7.45 - 0.32 - 0.45 + 2.91 Jan. 5, 2005 6.94 - 1.19 - 0.49 + 2.68 Apr. 15, 2005 9.41 + 1.04 + 5.49 + 9.78 Oct. 12, 2005 7.93 + 1.25 + 7.3 +16.94 Date (continued) Lowest Level DJIA % Change 2 weeks later DJIA % Change 3 months later DJIA % Change 12 months later May 18, 2006 8.55 + 1.07 + 1.86 ? June 13, 2006 7.93 + 2.04 + 7.4 ? Feb. 27, 2007 8.04 ? ? ? Average Gain/Loss 2.98% 8.88% 20.90% In summary, since 1990, there have been 18 cases in which the percentage of stocks above their 10-day moving averages has dropped below 10%. In 78% of those cases, the market was up an average of 2.98% in the next two weeks. In 94% of the cases, the market was an average of 8.9% in the next 3 months. And, in 94% of the cases the market was up an average of 20.1% in the next 12 months. The chart below of the Dow Jones Industrial Average shows the approximate locations of each of the dates included in the above table.

[mortiz]

XD, A quick cursory look at three 90% or more down volume days within a three week period "usually" resolves in bottoms within a few weeks maximum, and the ensuing draw downs are not huge. I have conducted some research for two 90% or more down volume days within a short time frame (posted on TW), and have done the same with three extreme down days, but cannot find the results, so will have to recreate the cluster of three days study when time allows. From my studies of internals extremes in both up and down directions, the following results usually hold: 1) Up extremes are typically initiation moves leading to much higher prices going forward... this is seen in MCOs often following a bullish MCO divergence with price following declines. 2) Down internals extremes are typically momentum lows, followed by "nominal" lower price lows, and are rarely kickoff events for additional price declines of 10%. I have found a few examples from the 1940s (a time frame that was the Wild West wrt internals volatility), and once in the 1950s where it led to 7% to 8% more in price damage. This time could be different of course, but probabilities are high we are not too far from a price low, and that low will likely not be 10% lower than where we are now, more likely in the 2% to 5% lower range. FWIW Randy

[humble1]

good point, x. as you probably know, this was one of zweigs major indicators when he was calling major market turns. in the 1960's, when he really got going with his indicators and was a main contibutor to barrons then, he was really the main/only t/a man as t/a had taken a back set to fundamentals since the market wipeouts in the depression.'

[A-ha]

Randy, I am also expecting about %5 or so. Some of the intermediate term breath indicators I use started to give premature climax signals, usually some sort of tradable bottom is put after a week or so. But I expect nothing more than a tradable bottom. Nothing close to the summer lows anyway. That was a high quality bottom imo. PS: Dear Admins, I am having hard time to surf TT. Did you ban me or something. I love you