Richard Russell regards the combined losses of the US markets this week as significant. Other sources he regards as significant draw the same conclusion.
"Yesterday was the first 90 percent down-day in this market cascade. A 90 percent down-day is a day when down-points comprise 90 percent of up + down-points and at the same time down-volume is 90 percent of up + down volume. What's notable about yesterday's action is this -- 90 percent down days don't usually come singly, they usually come in a series of two, three or four or more 90 percent down days.
Technically, the wheels seem to be on the verge of coming off the market vehicle. Yesterday, everything tradeable with few exceptions seemed to be heading down. Lowry's Buying Power Index plunged to a new low for the year while Lowry's Selling Pressure Index surged to a new high for the year."
[AE Note -- Desmond is one of the principals of Lowry's Research and either developed or refined the "90% down day" principle. Not as catchy as the Hindenberg Omen which, by the way, is also currently in effect, it is an investment signal ignore at one's peril.]
"Joe Granville called yesterday's action -- a collection of "the most bearish reversal patterns that I have ever seen in one day."
"Breadth was horrendous with more than 2000 declines over advances. New lows easily topped new highs. The sentiment background couldn't be worse with month after month of more bullish advisors than bear advisors -- while the VIX was still in the low range at just over 14.
"Volume picked up as the market tumbled. All in all, it was a nasty day in the face of what I consider incredible investor complacency. On top of everything else, the cash position of the mutual funds, adjusted for interest rates, is at an historic low, meaning that the funds are totally unprepared for a resumption of the primary bear market."
FWIW, it's quite likely that my personal "elves" list will flip bearish on Monday. The Chartist is bullish, James Stack is hedging but is bullish. On the other hand both Russell and Lowry's are bearish. I haven't tracked down the Ned Davis reading yet (anyone have it?) I expect that this week's action will result in Hussman turning bearish. If so, that is when I start to significantly add to short positions.
Rogue
AI
