- There is a high probability of correction in next 2 to 5 days.
- The correction may be just a minor dip in overall trend .
- That has been the trend so far since March.
- However if you are not positioned right and have lot of overextended stocks you can suffer sharp draw-downs.
- We have had a very lopsided breadth for last 10 days.
- The cumulative breadth ratio is at 6.11. Which means in last 10 days for every 1 stock down 4% there were 6 stocks up 4% plus.
- New sectors continue to breakout.
- Stocks which are currently overextended are vulnerable.
- But we continue to find stock breaking out from consolidation.
- Market is also shifting its focus to growth stocks.
- IBD 100/200 are now having breakouts and follow through.
Market monitor is market breadth
based market timing tool
|Daily||# of stocks up >4% on high volume||555||77 stocks with 100 million plus dollar volume.(M$V)|
Big stocks are breaking out.
|Daily||# of stocks down>4% on high volume||48|
9 stocks with 100 million plus M$V
|Primary||# of stocks up >25% in a quarter||2496|
|Primary||# of stocks down>25% in a quarter||131||This is in caution mode.|
This is the lowest level I have seen in MM since
I have been tracking this data for last 8 to 9 years.
This year everything is abnormal.
We will get a correction soon.
But other secondary indicators are not at extremes.
So move might have more legs.
|Secondary||# of stocks up> 50% in a month||33||This is moving towards extreme territory.|
In this market these readings have gone up
above 100 couple of times
|Secondary||# of stocks down>50% in a month||1|
|Secondary||# of stocks up>25% in a month||336||Moving towards extreme.|
Highest was 875 in August
|Secondary||# of stocks down>25% in a month||6|
|# of stocks up>13% in 34 days||2412|
|# of stocks down>13% in 34 days||357|
|MMA+||% of stocks in confirmed uptrend||73||Bearish|
|MMA-||% of stocks in confirmed downtrend||11|
|#of stocks up> 4% in last 10 days/|
#of stocks down>4% in last 10 days
|6.11||We had lot of buying in last 10 days.|
So you see cumulative ratio has turned above 6.
Typically the buying persists for sometime after this hppens.
So the correction might be just a pullback.