The New CS Board

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When bad news is met by a strong move higher in markets, we interpret it as a very bullish sign. We also note that today was a bullish Outside Reversal Day. We’ve seen bearish reversals in August and September; this is the first bullish reversal signal since 1 July. That signal presaged a 13% rally in the S&P 500. Based on my bottom analysis, it appears that this time it may be signaling a more significant move higher – my “time to buy” signal was triggered on 27 September with the warning that the S&P 500 might fall below the 27 Sept close, but probably not more than 5% below it. The Index did close about 2% below the 27 September low. Today’s move suggests we may not dip below the lows again...
...Volumes have been declining since the 30 Sept low suggesting a slowdown in selling and tending to confirm that the bottom might have been in the vicinity of 3600 on the S&P 500. This has continued to support the position that the best move is to “buy-the-dip.” Today volume bounced back to about 5% above the monthly average. Further 80% of the volume was up-volume. Another strong 80%+ up-volume day Friday would be a bullish sign, adding evidence that 12 October was the final bottom.