Interesting read here from Lowry’s. I don’t have the data on how it relates to today’s market though I do know there were a high number of 90% up days in March. If anyone can shed some light on this I would be very interested in their thoughts.
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Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
E
the question you have to ask is, to what extent are investors disgusted by stocks (i am sure you are reader of Hussman’s weekly commentary)
90% down days signal a revulsion to stocks
more than one signals more and more distaste for stocks
therefore, the more Lowry 90% days, the more stocks are sold and removed from portfolios and the more likely a reflexive move in the market
hence, one 90% day is not enough flushing, but 2 or more in short order are…..
however, although im not to savy with stocks i do believe this
that the massive global deleveraging has long long way to go….
and this undoubtedly will lead to lower equity prices….
however, due to mo-mo trading, the ease of online trading (“hey lets gamble, its only $9.99 to get in”) will add much vol and noise, so +/- 1,000 pts can be considered non-directional or the margin of error….
that being said….thanks for the post, this is currently on my top 3 blog/sites for commentary (Hussman, Zero Hedge and PragCap)……
no sense reading the verbal diarreah at minnyanville or seeking alpha…..
my uneducated “guess”….we test 6500, and fail…..say to 5800? then a massive rally “at some point” even to 10,000….good for the traders, but decimating to 401K’s, baby boomers and those with high blood pressure
E
oh, (damn no edit button), i give no time line for my “guesstimates”….otherwise, for sure i will be way wrong….i tend to be two weeks early
Cullen Roche
Nice thoughts. I wish I had access to the Lowry’s data so I could compare this paper to today’s market. I caught a lot of spam/hate mail for posting that reuters link with the FDIC comments. Apparently people don’t like the potential idea that this crisis has a long way to go.
Eric
Granville has spoken alot about the 90% upside and 90% downside days in his newsletter…he had some nice buy calls on BofA and some others in the 3’s. He is fully convinced we are in a new bull.
hamod1
ALso take into not, the number of stocks breaking life lows during a sharp vol spike and massive selling pressure…. I think we have not quite bottomed yet, maybe next year. good post though, will follow
ejack
Here’s a report I generated for up/down volume 2008-2009, where “percent up” is the percentage of total volume for the day that was up. So 7% up = 93% down. Take these numbers with a grain of salt, I think they’re right but I just threw this together right now.
Year month day up volume down volume percent up
2008 1 4 127330.00000 1524705.00000 7.7074638249189636
2008 2 5 142807.00000 1524592.00000 8.5646566898504797
2008 2 29 102281.00000 1625486.00000 5.9198375706909554
2008 3 6 116894.00000 1516222.00000 7.1577279262465128
2008 3 18 1844022.00000 185199.00000 90.8733942729747031
2008 6 26 122275.00000 1393282.00000 8.0679908442902510
2008 9 4 104265.00000 1185489.00000 8.0840997585586089
2008 9 15 159384.00000 1667781.00000 8.7230217303855974
2008 9 29 74983.00000 1813759.00000 3.9699969609401390
2008 10 6 167288.00000 1755204.00000 8.7016226855560387
2008 10 13 1669400.00000 144023.00000 92.0579478698571707
2008 10 15 80080.00000 1595207.00000 4.7800764883867660
2008 10 22 67192.00000 1460382.00000 4.3986085125826965
2008 11 5 113275.00000 1205123.00000 8.5918667959144355
2008 11 6 112664.00000 1432909.00000 7.2894648133734220
2008 11 12 74110.00000 1373152.00000 5.1207037841109626
2008 11 19 99899.00000 1571747.00000 5.9760858459267094
2008 11 24 1807270.00000 144596.00000 92.5919094855896870
2008 12 1 41073.00000 1558170.00000 2.5682776163472343
2008 12 16 1430178.00000 141994.00000 90.9682910012390502
2009 1 14 47910.00000 1357712.00000 3.4084554738044794
2009 1 20 99674.00000 1632640.00000 5.7538067578972403
2009 1 29 123384.00000 1294373.00000 8.7027607692996755
2009 2 10 122686.00000 1693643.00000 6.7546132886718210
2009 2 17 91669.00000 1518497.00000 5.6931397135450631
2009 3 2 84705.00000 1903813.00000 4.2597049662110175
2009 3 5 162325.00000 1727326.00000 8.5902105732751709
2009 3 10 2095977.00000 76125.00000 96.4953303297911424
2009 3 12 1685384.00000 137280.00000 92.4681674735442188
2009 3 23 1852168.00000 45736.00000 97.5901836973840616
2009 3 30 63389.00000 1443053.00000 4.2078619687980022
2009 4 2 1698460.00000 175716.00000 90.6243597186176752
2009 4 9 1692479.00000 130403.00000 92.8463279575968165
2009 4 20 69554.00000 1670298.00000 3.9976963557819861
2009 5 4 1606834.00000 99898.00000 94.1468256293313772
2009 5 13 142070.00000 1611117.00000 8.1035280320924123
ejack
Oops, sorry, it didn’t format properly in the comments. You can always cut and paste it into notepad and it seems to look okay. Basically in 2009, we had 7 90% down days up to March 5, then 6 90% up days with 2 90% down days in between, and then today was a 90% down day.
Cullen Roche
Good stuff ejack. Thanks for the data.