The New CS Board

[dww10063]

Years after extreme breadth lows I'll define as 10MA of RHCOMPQ <10% or daily NYA200R below 20%. These tend to be very strong years almost straight up from March to Dec or March, but the trick is to avoid getting caught by an extreme double bottom which can be up to a year or more apart. The first pair of charts will go to 4/1/14 in case we get a double dip. I'm only going back to 1998 because in the 20 years prior to 2000 we generally had conditions of a strong economy, relatively high real rates, nominal rates gradually falling from multiyear highs, and extreme breadth lows usually only happening once or at most twice close together before the market continued strong rallies. In the years since 2000 we've had generally a struggling economy, low real rates, nominal rates ranging in multiyear lows, and extreme breadth lows bottoming roughly a year apart before the market could mount a strong rally, often from lower lows in price. The period of 2000-2002 is a special case of the tech crash followed by 9/11 to set up a triple bottom in breadth with lower lows in price. As you can surmise, I suspect we'll see another extreme breadth low within 12 months before the market gets going well again. Good luck trading, Don