Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Gold Price – US$700 Or US$7000? - 16th Jan 19
Commodities Are the Right Story for 2019 - 16th Jan 19
Bitcoin Price Wavers - 15th Jan 19
History Shows That “Disruptor Stocks” Will Make You the Most Money in a Bear Market - 15th Jan 19
What Will the Stock Market Do Around Earnings Season - 15th Jan 19
2018-2019 Pop Goes The Debt Bubble - 15th Jan 19
Are Global Stock Markets About To Rally 10 Percent? - 15th Jan 19
Here's something to make you money in 2019 - 15th Jan 19
Theresa May to Lose by Over 200 Votes as Remain MP's Plot Subverting Brexit - 15th Jan 19
Europe is Burning - 14th Jan 19
S&P 500 Bounces Off 2,600, Downward Reversal? - 14th Jan 19
Gold A Rally or a Bull Market? - 14th Jan 19
Gold Stocks, Dollar and Oil Cycle Moves to Profit from in 2019 - 14th Jan 19
How To Profit From The Death Of Las Vegas - 14th Jan 19
Real Reason for Land Rover Crisis is Poor Quality of Build - 14th Jan 19
Stock Market Looking Toppy! - 13th Jan 19
Liquidity, Money Supply, and Insolvency - 13th Jan 19
Top Ten Trends Lead to Gold Price - 13th Jan 19
Silver: A Long Term Perspective - 13th Jan 19
Trump's Impeachment? Watch the Stock Market - 12th Jan 19
Big Silver Move Foreshadowed as Industrial Panic Looms - 12th Jan 19
Gold GDXJ Upside Bests GDX - 12th Jan 19
Devastating Investment Losses Are Coming: What Is Your Advisor Doing About It? - 12th Jan 19
Things to do Before Choosing the Right Credit Card - 12th Jan 19
Japanese Yen Outlook In 2019 - 11th Jan 19
Yield curve suggests that US Recession is near: Trading Setups - 11th Jan 19
How Unrealistic Return Assumptions Are Ruining Your Stocks Portfolio - 10th Jan 19
What’s Next for the US Dollar, Gold, Stocks & Bonds? - 10th Jan 19
America's New Africa Strategy - 10th Jan 19
Gold Mine Production by Country - 10th Jan 19
Gold, Stocks and the Flattening Yield Curve - 10th Jan 19
Silver Price Trend Forecast Target for 2019 - 10th Jan 19
Silver Price Trend Forecast 2019 - 9th Jan 19
Did Strong December Payrolls Push Gold Prices Up? - 8th Jan 19
How to Spot A Tradable Stock Market Top? - 8th Jan 19
Why 90% of Traders Lose - 8th Jan 19
Breadth is Very Strong While Stocks are Surging. What’s Next for Stocks - 8th Jan 19
Half of Investment-Grade Bonds Are Just One Step from Junk Status - 7th Jan 19
Stocks Rallied Again, Still Just an Upward Correction? - 7th Jan 19
Gold Golden Long-Term Opportunity - 7th Jan 19

Market Oracle FREE Newsletter

Bitcoin Analysis and Trend Forecast 2019

Stock Market’s High Uncertainty is Medium Term Bullish for Stocks

Stock-Markets / Stock Markets 2018 Apr 08, 2018 - 03:51 PM GMT

By: Troy_Bombardia

Stock-Markets

The stock market’s volatility has been crazy recently. It’s clear that the majority of investors and traders are undecided. It soars a few percent over 2 days, then tanks a few percent over 2 days, then soars, then tanks…

We can see this uncertainty in the market’s breadth as well. The NYSE’s Up Volume indicates the number of stocks that went up today.

8 out of the past 11 trading days have seen Up Volume either above 80% (i.e. most stocks surging) or below 20% (i.e. most stocks going down). This is a rare medium term bullish sign for the stock market.


Here are the historical cases when the market’s breadth was this uncertain (8 of the past 11 trading days having more than 80% Up Volume or less than 20% Up Volume)

  1. April 6, 2018 (current case)
  2. September 2, 2015
  3. August 16, 2011
  4. April 3, 2009
  5. October 27, 2008
  6. October 16, 2002
  7. August 30, 1966
  8. May 17, 1966
  9. June 22, 1962
  10. November 29, 1957

Here’s what happened next to the S&P 500.

September 2, 2015

This occurred near the bottom of the S&P’s 15% “significant correction”. The stock market fell a little more in the short term, but the downside was limited. The stock market went up over the next few months.

August 16, 2011

This occurred near the bottom of the S&P’s 21.5% “significant correction”. The stock market fell a little more in the short term, but the downside was limited.

April 3, 2009

This occurred after the S&P’s 2007-2009 bear market ended. The S&P continued to soar after this date.

This historical case doesn’t apply to today because the S&P has made a 9 year bull market so far. We are not at the bottom of a bear market.

October 27, 2008

The S&P made a bounce over the next 2 weeks but then proceeded to make new lows

This occurred in the middle of bear market and recession, AFTER the S&P had already fallen >40%. This historical case does not apply to today. We are not in a recession right now.

October 16, 2002

The S&P continued to rally for another 2 months and then retraced. It didn’t make a bear market low in March 2003. Then the S&P proceeded to soar throughout the rest of 2003.

 

August 30, 1966

This occurred in the beginning of the S&P 500’s 23.6% “significant correction”. But even though the S&P went on to make new lows, it rallied a little bit over the next 2 months. The medium term’s downside was limited.

May 17, 1966

This came close to marking the 23.6% “significant correction’s” bottom. The S&P made a marginal new low 1.5 months later, but then it surged to new all time highs by 1967.

June 22, 1962

This occurred near the bottom of the S&P 500’s 29.3% “significant correction”.

November 29, 1957

Conclusion

This is a medium term bullish sign for the stock market. If we exclude the recession and post-bear market cases, the S&P always went up over AT LEAST the next 1-2 months.

*The S&P 500 is not in the midst of a recession today, that’s why we exclude those cases. The economy is still growing.

Even the worst case scenario – August 30, 1966 – saw the S&P go up a little over the next 1.5 months.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules