Oversold

Market Monitor: Bearish (If you take out the short ETF and funds we are approaching bullish zone). All secondary indicators are bullish.

• If you look at Market Monitor first row, you will see in last 5 days we had days where the readings ranged from 723 to 2253. That is extremely high level of selling. It has now persisted for 13 days with just 2 days where there was some relief. Such extreme periods have very high probability of precipitating in reflex bounces.
• Similarly if you see the primary indicator of # of stocks up or down 25% in a quarter, you will notice it is now approaching extreme readings. One of the reason it has not reached extreme so far is because market structure has changed in last 11/2 years with proliferation of short ETF. So if we account for that the new extreme reading will be 300 instead of 200. We are now almost reaching that stage.
• The secondary indicators are all in bullish zone. In fact if you look at number of stocks down 50% in a month you will see it is in extreme territory for 9consecutive days. Those kind of things have never happened before.
• Similarly the number of stocks up 100% from 52 week low is at extreme level. Here again if you take out the short ETF it is at lowest readings I have seen in several years.
• So everything indicates a extreme oversold level. Under normal market circumstances by now we should have seen a big counter trend move, but we are in a once in a lifetime kind of event currently.