Thread by @cperruna

THREAD

Can major market tops & bottoms be identified with accuracy? Yes!

Data is presented showing that identifying “major” market bottoms is easier than any other change in market direction. Market tops can also be identified but a bit more difficult.

chrisperruna.com/2013/03/18/ide…

2/ Daily New Low readings were well above 1,000 with a peak of 2,901 on Friday, 10/10/08. The market was screaming exhaustion as the selling pressure of the past 18 months was hitting its max. All other readings were in extreme territory including the basic NH-NL differential...

3/ the 10d & 30d differentials and the % ratio. The extreme readings continued through the end of November 2008 when they final subsided in December but remained negative.

4/ January '09 was like December '08 as the market remained negative. Then in Feb '09, the market dropped again as the NH-NL readings started to head back towards more extreme levels.

5/ However, they didn’t reach the levels of October 2008 so this signified a “higher low” for the readings, a second clue that the market may be looking to reverse direction.

6/ March 2009 was the turning point. The extreme readings subsided (light red and dark red readings on my graphics) and the FIRST positive reading was registered since May 2008 (represented by “blue figures” on my graphics).

7/ On March 26, 2008, the NYSE logged a reading of 10 New Highs and 0 New lows, the first time a “0” New Low reading was logged since February 27, 2004. By contrast, the NYSE logged 11 additional days with “0” New Lows in 2009 and 20 days with “1” New Low for that same year.

8/ The year 2008 had one day with “1” New Low and the years 2005, 2006 and 2007 had zero days with “1” New Low. Amazing stats!

9/ It wasn’t until July 2009 that this confirmation in STRENGTH (underlying breadth) took place & the market signaled that the nasty bear of 2007-2008 was over. Thursday, July 23, 2009 was the day the market logged its first triple digit New High reading with 108 NH’s & 2 NL’s.

10/ From there, the market was off and running as triple digit readings became commonplace and it wasn’t too long before 200, 300 and 400+ New High readings were logged (October 14, 2009 gave us 462 NH’s and 2 NL’s). By January 2010, the NYSE had its first 500+ New High reading.