There have been 43 consecutive days in which the number of 52-week new lows on the NYSE and NASDAQ has exceeded the number of 52-week new highs.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel is the S&P 500 index price.
The green and red lines in the middle panel is the NYSE + NASDAQ 52-week new highs minus 52-week new lows.
The red shading in the bottom panelshows the consecutive days NYSE + NASDAQ 52-week new lows > 52-week new highs.
The Takeaway:When this downtrend is ready to reverse, we will notice a sharp decline in new lows, followed by a gradual increase in new highs.
The Bulls completed the first stage of finding a bottom. Stocks must first stop declining, as we have witnessed a collapse in new lows. However, we have not yet seen any meaningful movement in the second stage, which is the gradual expansion of new highs.
Over the past 43 days, it still remains that there are more stocks in the NYSE + NASDAQ that have hit new lows than new highs.
Many people on X may want to find an end to this bear market, but the price action does not yet support that conclusion.
The risk environment remains challenging.
Remember that the best days usually happen in close proximity to the worst days.
These tend to cluster in periods of heightened volatility.
And that is what is happening right now!
Is there potential for new lows to continue expanding? Absolutely.
Can the Bulls stage a rebound from here? Of course.
However, using the weight of the evidence approach, there is still a big tilt in favor of the bears.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
PS:Kenny Glick held a live event yesterday. If you didn’t see it, and you’re interested in trading volatile environments like the one we’re in, you need to check it out. There is no one better suited for these times. Not only is Kenny one of the most seasoned traders I know, but he’s having as much fun as anyone out here. His room is an absolute blast. I know from experience. Find out for yourself.
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