Here we see weekly new highs minus lows as a percentage of issues traded on the NYSE going back to 1981. What we can see is that a large number of bear markets ended with spikes in the proportion of issues making fresh 52-week lows. Specifically, we've seen 20% or more of stocks making new lows during the following periods:
* October, 1981
* May and July, 1984
* October, 1987
* August and September, 1990
* April, 1994
* September, 1998
* October and December, 1999
* September, 2001
* July and October, 2002
* May, 2004
* August, 2007
* January, 2008
Not all of these, of course, represented long-term bottoms. Nor did the market make an exact price bottom when the proportion of new lows peaked. For instance, we didn't see a price bottom in 1998 until October. The great majority of occasions, however, did represent bottoming processes of at least intermediate-term significance.
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2 comments:
It is interesting to look at rising lows. The current low is clearly above last year's. Same in1981-82, 2002-2003.
This is positive divergence and supports the idea of a rally.
As you know, I have been a bear for a while but called for a ST botom on Jan 22(on my Jan18 post)
Last week I expected a pullback, which I think is almost over.
See "Number One Market Timer"
I too look at the highs vs. lows.
New High-Low Index Bottom Indicator
Today, with the help of stockcharts.com (please see link above with stockchart link with all the necessary information), the New High-Low Index is at 40%. Typically, we see bottoms when this number spikes below 20%. Near the 1270 bottom, I've even seen this number go down to 0.
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