From 7/25/2011 to 8/8/2011 the SPY lost 16% in 11 trading days, the Nasdaq 100 lost 15%, and the Russell 2000 lost 21.6%. In the last five trading days, the SPY on a closing basis has lost 9.7%. The Nasdaq 100 -11%, and the Russell 2000 8.4%, but it's off 14% from its high on 6/23. In 2011, the markets got ugly real quick, individual stocks were crushed.
On 7/25/2011 61% of all stocks were trading above their 40-day moving average, by 8/8/11 that number was down to 2%, a complete washout, today that number stands at 7%.
At the same time, (7/25/2011) 1,119 stocks were up 13% or more in the last 34 days versus 481. By, 8/8/11 those figures were 98 to 3,693, the selling was palpable, today's figures are 271 up 13% or more in the last 34 days versus 2,568 that are down. Another down opening and we will be close to the 2011 figures that will probably be a low as far as the breadth numbers are concerned. While the breadth numbers might bottom on a down opening tomorrow, the indices are sure to a hit a new low in the future with the ultimate low probably in October.
2011 +13%, -13% figures.
The amount of stocks above their 20-day moving average bottomed at 2% in 2011, today's reading ended at 6.51%. Low readings usually lead to short term bounces. Also, notice the higher high in October while the SP500 hit a new low.
- A breadth low is a down opening away.
- The first index low will not be the last, the ultimate bottom might be in October, in which you will notice the positive divergences.
- The current oversold levels will make shorting tough, expect vicious rallies to be faded, sell-offs that will be bought, look at the 2011 chart.
- The 2011 playbook would be ideal oppose to a drawn out multi-month correction.