Watch breadth if you do not want surprise | stockbee

2/06/2018

Watch breadth if you do not want surprise



Excess bullishness was building up for days. As you can see the number of stocks up 50% in a month was above 20 for long stretch. Such excess bullishness is precursor to market corrections.

Breadth deterioration in last 5 days prior to yesterday was another sign of distribution building up to the selling yesterday.

Enough warning was there about possible correction if you had right tools.

What happens next? Typically such panic induced moves resolve in short term bounces. A breadth extreme of 1000 plus day on stocks down 4% plus would be better. That washes out sellers.   

7 comments:

QUIKTDR said...

Good morning Pradeep,

When you use 4% Bearish b/o (or breakdown) do you use candidates that closed in lower 20% near or at lows of day ? (C - L) / (H - L) < 0.8

Thank you in advance!

ANS said...

Hello,

For 401K accounts, would you recommend selling and cashing out as 10 day ratio has dipped below 0.5, or should we hold?

Thanks

Pradeep Bonde said...

no

QUIKTDR said...

Thank you have a profitable day!!

ANS said...

Hello Guru,

Can you please advise if we should sell out of our 401Ks given that the 10 day ratio has dipped below 0.5?

Thank you

Pradeep Bonde said...

too late. time to sell was when momentum was extreme few weeks ago.

ANS said...

Okay. Would it be better to just hold then? If possible, could you do a post on managing 401K using Market Monitor? That will help a lot of folks with limited knowledge like myself.

Thank you.