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Strategies & Market Trends : Ask DrBob

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From: Drbob512	7/15/2008 10:08:25 AM
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*** The NYSE a/d is 1/8 so it is approaching the selling climax criterion of 1/9 but the u/d vol is only 1/6, so it needs further deterioration to reach that criterion. Also, the Nasdaq figures are not as negative so they need to worsen. Selling climaxes do not always accompany tradeable bottoms but they are signals that traders prefer, otherwise, it is difficult to identify a bottom. Sometimes a double bottom is a good signal but it is only after the fact. A selling climax is defined as having several 1/9 or worse a/d's and u/d vol figures on the NYSE and/or Nasdaq, on heavier than average volume of the past few weeks, and then a strong bullish reversal before the close. So the decline has to occur early enough. A washout in the next couple of hours to a Dow down over 250 or 300 points with worse breadth and u/d vol figures might mark a tradeable bottom, but a bounce from here without capitulation would portend further weakness this week and not a bottom today. drbob

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