One of my to a greater extent than reliable measures of marketplace forcefulness in addition to weakness comes from a disaggregation of the NYSE TICK, the cumulative mensurate of upticks vs. downticks amid all NYSE stocks. I process the upticks in addition to downticks equally split distributions, reflecting buying in addition to selling pressure level respectively. In the nautical chart above, we’re looking at a 10-day moving average of downticks (raw information from e-Signal; all computations inwards Excel).
Generally, nosotros come across a relative absence of selling (high levels of the carmine trouble on the chart) preceding marketplace tops in addition to an intensity of selling pressure level (low levels of the carmine line) at relative marketplace lows. Note the growth inwards selling pressure level inwards recent sessions, taking the mensurate below -400.
Going dorsum to 2012, when we’ve had readings of -400 in addition to less (N = 132), the side past times side v days inwards SPY convey averaged a gain of +.71% versus an average gain of +.21% for the residue of the sample, amongst 88 occasions closing higher in addition to 44 closing lower.
This in addition to the excess discover of sell signals we’ve been seeing from the technical systems I follow larn out me opened upward to the possibility that the market’s electrical flow choppy attain volition ultimately discovery resolution to the upside. I discovery these kinds of marketplace queries to a greater extent than helpful inwards formulating hypotheses than difficult in addition to fast conclusions. It’s when markets hold off strongest in addition to weakest that it’s helpful to hold off at what has happened historically nether those conditions. Very oft that tempers whatsoever recency bias in addition to style to extrapolate the recent past times to the near-term future.
Further Reading: NYSE TICK