Sizing Upwardly The Downwards Market

Stocks accept started the twelvemonth on a especially weak note, retracing the lion’s part of rally from mid-December.  This has really much gibe the before mentioned query, inwards which really high levels of bullishness amid ETF buyers has led to pitiful near-term returns.

Above are iii updated views on the marketplace weakness.  The transcend nautical chart illustrates the high grade of programmatic selling swamping the recent market.  This measure, based on a handbasket of institutional favorite stocks together with their simultaneous upticking vs. downticking, shows that selling pressure level inwards these large cap shares has been intense.

When nosotros await at the entire market, however, it’s non clear that the deep selling of the institutional favorites has translated together with then far into highly wide selling.  The 2nd nautical chart tracks stocks across all exchanges making fresh iii calendar month highs vs. iii calendar month lows.  Note how novel lows are nowhere nigh the levels seen inwards mid-December together with mid-October.

That same painting present emerges from my mensurate of buying pressure level (upticks) versus selling pressure level (downticks) across all NYSE shares (bottom chart).  While the residue betwixt buying together with selling has turned negative, it yesteryear no agency reflects the breadth of selling that nosotros saw inwards mid-October or mid-December.

Deep selling that cannot larn wide selling invites the hypothesis of underlying describe inwards the wide stock market. I volition hold upward watching novel highs together with lows together with sensitive momentum measures closely to run into if this turn down begins to hit or lose steam.  If the latter, nosotros could run into a salubrious rally emerging from the recent gloom.

Further Reading:  When V Bottoms are non V Bottoms
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