Here is the five-day simple moving average of all stocks (NYSE, NASDAQ, ASE) making new 20-day highs minus those making new 20-day lows. (Click on chart for greater detail). We can see, going back to 2005, that pullbacks below -5000 have been excellent indications of intermediate-term market lows.
We can also see that deterioration in the new highs has preceded market corrections, including most recently. Intermediate-term bull runs have tended to see at least one dip well below the zero line prior to terminating. We have just made such a dip this past week.
Notice how we spend considerably more time above the zero line than below. That is the mark of a bull market: over time, stocks keep making new highs. Despite the recent correction, nothing in that dynamic has changed thus far.
RELEVANT POSTS:
New Highs and New Lows: What They Tell Us
The Four Legs of Market Psychology
New Highs and Lows in the Stock Market
Using Intraday New Highs and Lows to Anticipate Market Turns
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