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The Anatomy Of A Retesting Of The Low
Submitted by Eric Bush via Gavekal Capital blog,
The S&P 500 is now only about 1% off its 8/25 low. Have the market internals deteriorated as much as the headline price index has? Lets take a quick tour through our chart library to find out.
On 8/25, 17% of US stocks were trading below its 200-day moving average. As of yesterday, this series has dropped back to 19% after increasing to 33% on 9/17. Unfortunately, we haven’t seen a trend shift in momentum yet. Through yesterday, 33% of US stocks had its 50-day moving average trading above its 200-day moving average. On 8/25, 51% of stocks had its 50-day moving average trading above its 200-day moving average
Large declines in stocks are ticking up again but still below the 8/25 level. The number of stocks with a one-day 5% decline was 83 yesterday. On 8/25, there were 150 US stocks that declined by at least 5%. It’s hard to imagine that we went through a period in 2008 where we regularly were seeing 200-500 US stocks decline by 5% in a day.
The median stock performance over the past year is unchanged. Over the past 200-day, the median stock performance YTD is -8%. This is the same level as it was on 8/25 and is the worst YTD performance since 2009.
83% of US stocks are at least in a correction over the past 200 days. On 8/25, this spiked to 90%. The number of US stocks in a bear market has increased. 48% of US stocks are now in a bear market over the past 200 days compared to 43% on 8/25. While this has been painful for investors, far fewer stocks are in bear market today than were in a bear market in 2011 and 2008.
Finally, in a positive sign the number of stocks making new 200-day lows remains below the 8/25 high. On 8/25, 39% of US stocks were making new 200-day lows while “only” 31% made new 200-day lows yesterday. This will be an important internal indicator to keep an eye on as new highs in 200-day lows tend to mark the emotional peak in a market downturn. For example, on 8/8/2011 54% of US stocks made 200-day lows. The ultimate price bottom was on 10/3/2011 when 44% of US stocks made new 200-day lows. In 2008, an unbelievable 80% of US stocks made a new 200-day low on 10/9/2008. The eventual price bottom wasn’t until 3/9/2009 when only 35% of stocks made a new 200-day low.
All in all, the market internals haven’t been quite as bad as the recent price action. Negative momentum hasn’t accelerated, the number of large declines are fewer than they were on 8/25 and most encouragingly, the percentage of stocks making new 200-day lows are less than they were about a month ago. On the flip side, the most concerning internal data is the fact that more stocks are in a bear market today than they were on the 8/25 low. It’s too early to tell if we have seen the ultimate price low for this correction but we believe that tracking new 200-day lows should be a helpful sign post for investors.
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the fuck does all that mean then
Fingernails screeching down a metal roof.
This helps.
It means the author is still attempting to technically analyze a completely rigged market.
The layoffs are rising!!! Chesepeak Energy just announced they are laying off 15% of their work force, OUCH!!! Looks like we are going down folks!
It "means" that on a price retest of the lows, if one is expecting a bounce, one would expect the internals to look better than the external price action. If one is bearish, one would expect to see internals materially worse than they were when the price action retests the lows. This is how many successful traders gain useful information about the trend. What we are all trying to figure out is will this test of the lows hold and should we start positioning bullish, or continue to position bearish. Im leaning bearish personally, but I'm not dogmatic in my views.
BTFD?
Nothing, really. The only things that matter are those tall-green candles hand crafted by the wonks at 33 Liberty, because nobody else is buying this shit.
SELL pm's and buy stocks! That's the best way to fully participate in a bear market.
It appears everyone is overreacting. Yeah.....right
Must.Be.16k.
haha you can totally tell that's what they are desperately trying to do.
black monday? hardly
Good analysis. We should be seeing a false reversal soon, and then a really emotionally damaging plunge that will tear apart most bulls emotionally.
The author is dating himself -- Since when have technicals, charts, analysis, or market internals mattered?
Pre 1913 if you want the truth.
That hasn't stopped major crashes though.Don't dismiss the charts out of hand, they may
have been suspended for a while, like Wil E Coyote over the cliff, but gravity will not be abolished.
I've been watching the ticker and it looks like the algo's are starting to counter each other and that could get interesting.....
haha there's your 3:30 ramp o'clock. right on schedule
Yep. Have Yahoo! finance open and have been watching. I saw the *markets* turn straight up, and I knew it had to be 3:30.
It was. Our blessed 3:30 Ramp Capital rarely lets us down.
looks like boj hit the usd/jpy NOS too early today.
'too soon junior!' /FF
*edit* - 3:47 EST - musta tapped the reserve tank
"On 8/25, 17% of US stocks were trading below its 200-day moving average. As of yesterday, this series has dropped back to 19% after increasing to 33% on 9/17. Unfortunately, we haven’t seen a trend shift in momentum yet.
He lost me with "Unfortunately". Why would it be "unfortunate" for stocks to fall? Oh, I know that's a rhetorical question.
It's the likes of malarkey like this that can be blamed for why we find ourselves where we are people.
no one has the ballz to use "worst since lehman" except zh.
That long term support line has some staying power, right? Today is the fourth time it's been tapped in just over month. How many other things can you tap so many times before it produces a monster??
Yep! Mission accomplished! Saved Dow 16k....for today anyway.
Thursday
FB, TWTR, GOOG, NFLX, etc... When layoff announcements begin to trickle out of this space, you'll know it's on, for reals. The periphery (other industries) are already starting. Now it's time for the untouchable, 'recession-proof' ether of social fuck-off to get its due.
This price action, downward trend short term on increasing volume, is more rational then the rapid decline of 8-24, 25. Traders are selling into rallies, and the fundamental outlook is worse then back then. The ONLY thing that can turn this tide would be QE or some other stealth liquidity play, and even that is short term bullish, based on the bearish of problems that necessitated it!