The sellers were in complete control on Friday | stockbee


The sellers were in complete control on Friday

It was disappointing to see no follow through on Thursday's 300 plus day.

In fact the selling on Friday resulted in many of the breakouts from previous day completely giving up the b/o gains. Add to that bearish range  in number of stocks that were holding up well or near 52 week high.

The breadth trends continue to be negative. $BPNYA is below its 5 day moving average and is showing  divergence with price.

Chip Anderson of has a blog post explaining the importance of tracking the $BPNYA to get a read on market direction. It is worth reading his post on it and his previous posts on it.

It's a question I get everywhere I go.  After every talk I give, someone comes up and asks "What's the one market indicator I should watch to see where things are headed?"  Many years ago that question gave me fits.  In my brain I'd immediately have 1,000 thoughts:  "There are so many indicators to choose from" and "Each indicator is interpreted differently" and "What if there are conflicting signals?" and "What if the NYSE changes its membership?" and...  You get the picture.  Needless to say, the answer that came out of my mouth back then wasn't pretty, or easy to understand.
Now the answer is simple:  The NYSE Bullish Percent Index - period.
I've written extensively on Bullish Percent Indexes (BPIs) before.  If you are not familiar with them, pleaseclick here to learn more.  The NYSE BPI ($BPNYA) is the "granddaddy of them all" and is one of the broadest BPIs we publish.  On numerous occasions in the past, it has been a leading indicator for the market and it always deserves periodic attention from serious ChartWatchers.

The sellers were in complete control entire day and snuffed out any hope of intraday bounce. The only place for hope was the end of the day breadth figure on negative side. They were below 300.

The market has potential catalyst for a big move in either direction in the form of the election results. Realistically a clear trend may not emerge until the election is over.

A complete capitulation kind of move with heavy and sustained selling will be good for the market to setup for a end of year rally.

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1 comment:

Smiddywesson said...

Good call. I particulary like the head fake on Tuesday prior to the big down day on Wednesday. There's no free lunch for the bears nowadays.