Today, there were 2 important indicators that suggest a strong bounce:
(1) The 52-week, New-high/new-low ratio improved by 3.5 standard deviations. (2) There were 90% down-volume days 5 May and 9 May, however, neither met all of the tests required for a Lowry Research bearish-signal. Both closes were too high. This signal would be very bearish if closes had been lower; but today (Friday) there was a 90%-upside, volume-reversal. The close Friday did meet all the tests for a Lowry 90% up-volume day. I think we have to consider this short-term bullish. Because the 90% down-volume indicators were not as strong as they could have been, it suggests that the selling was not as strong as it could have been either. I suspect that we haven’t seen the worst of the selling, but...
...in the meantime, this bounce should be a significant one that aggressive investors may want to trade. A 50% retracement from the bottom is possible and that would indicate a 9%-10% gain to the 4280 area. Of course, a bounce may be higher or lower. 50% is decent guess for a normal retracement, but this isn’t a “normal” downturn so there are no guarantees.
As of Friday’s close, the S&P 500 is 10.1% BELOW its 200-dMA & 7.1% BELOW its 50-dMA. 7-10% looks like a reasonable rally estimate, too.
AI
