XBI Components (only 27 out of current 85 survive back to 2000) have had the cumulative A/D averaged over 10 days (Cum A/Cum D) exceed 2x only a handful of times. Everyone making a big deal about this on the SPX and how it means higher every time. Not for bios. For bios, it means crashes coming traditionally. BTW SPX has done things it has never done before this past week. It looks extremely overdone ST but that is what 3rd waves do in EW language, and the wave this week was by some folks' count a 3 within a 3 within a 3. If they are correct, we are hundreds higher in no time although the strong straight up may never get this intense the rest of the way.
It happened 3-4x in 2000 timeframe, all of which but one had big rallies before rolling over worse than before. These were impulses higher in a steady down trend overall. Start at BTK 658, go to 800, fall to 600, go to 700, back to 600, then 800, then 700, then 800, then 650, then low 400s. So this sort of buying was FAR FROM BULLISH.
- 2.5x on 2/17/00 at BTK 658. 7% crash drop in 2-3 days, previous level recovered in 1-3 more days, and up 20-25% overall within 3 weeks and then bye-bye down 30% overall so 40-50% from highs by 3/30 with worse to come. ST BEARISH/MT BULLISH/LT BEARISH
- 2.48 on 6/9/00 at BTK 609 (up nearly 1/2 from lows 2-3 weeks previously). 6% 1 day crash followed. Four days of rally later, it had recovered the drop plus 2%. 1 day later it was up 10% in 1 day. Within 2 weeks overall, it was up 15% ultimately slowly tacking on another 5% over the next month. Within 3 weeks all gains gone. ST BEARISH/MT BULLISH
- 2.07 on 9/1/00 at BTK 786. 11% drop in 2 days. Full recovery in 3-4 weeks and drop to -20% within 6 weeks. Full recovery 3 weeks later. VERY BEARISH/MT NEUTRAL
- 2.32 on 1/24/01 at BTK 648. Oops - nearly 20% below 9/1/00. Chopped around for a week up/down 2-3% from start. The steady down from up 3% to down 20% over 3 weeks. 10% rally then big fall to down 1/3 from start within 2 months of start. VERY BEARISH (but you got chance to exit at level when triggered)
Ok, when did we see 2x next?
- You had a few benign occurrences in 2003 just below 2 (ONLY 15% and 8% drops within weeks but within an uptrend). And in BTK 4-500s. BEARISH
- Again in 2005, you had a few 1.9s. From 635 on 7/20/05, you dropped 4-5% in days and then chopped for 6 weeks before resuming higher. SLIGHTLY BEARISH
- You got a 15% drop in 2006 from a 1.85 area reading on 2/27/06. BEARISH
- 1.93 on 12/8/08 at BTK 620. 3-4% down in a few days but then back in a few days and up 6-7% by Jan 09. Ultimately you ended up down 13% overall into March 09. SLIGHTLY BEARISH ST/BULLISH MT/BEARISH LT
- 2.06 on 7/24/09 and 2.07 on 7/28/09. Up 2% from 1st to second reading and 3% overall before falling back to fractional losses within 2 weeks. Then 4% off by 3 weeks later. Within 2 months, +10% from Day 1. It did come back down a few months in but I don't pin that on this action. NEUTRAL to BULLISH
- 1.9 on 9/15/10 at BTK 1151. It was never really down after this reading, just months of sideways before leaping higher 3 months later. NEUTRAL to BULLISH
- 1.9 on 12/22/10 at 1309 BTK. Down 3% a month later before higher. NEUTRAL (but warning of slowing)
- 1.9-1.95 on 3/30-31/11. (Separate metric had 2.3-2.4x from 3/30-4/6/11 - current XBI members alive from 2000-now). 1363 BTK. All that buying only got another 1-2% during the period. Market never looked back and was up 10% within a month. BULLISH
- 1.8 on 7/7/11 (2.2 on other metric) at 1472 BTK. Down 25% in 6 weeks. VERY BEARISH
- 2.2 on 2/6/12 at 1420 BTK (entire collapse almost recovered). DOWN 10% in a month. Flat in 2 months. BEARISH
- 1.84 on 11/29/12 at BTK 1547. 1.95 on 1/14/13 at BTK 1660. 2.01 on 3/11/13 at BTK 1795. ONLY 1.6 on 5/15/13 at BTK 2036 (other metric near 1.8). 2.2 on 7/15/13 at BTK 2182. So 40+% rally as this thing oscillated beautifully with higher peaks (except one) every 2 months (except first repeat was 6 weeks). EXTREMELY BULLISH
- 1.73 on 12/3-4/13 at 2268-78 BTK. 1.95 on 1/21/14 at 2627. 1.96 on 2/21/14 at 2759. The last two were above 2 on the other metric. So 20-25% in this period UP with another 5% in next few days after 2/21/14 before rolling over. VERY BULLISH
- 2.23 on 10/28/14 (extreme 2.5 on other metric) at 3314. 1.7 on 12/31/14. 2.02 on 2/26/15. 3300-3900 over period. VERY BULLISH
- 1.95-2.02 from 2/23-26/15 with a nice rally for about 3 weeks of 8%. BULLISH
- 1.9 on 5/19/15. Choppy but upward bias to the top on 7/17/15. 7-8% rally. SLIGHTLY BULLISH
- 2.1 on 7/17/15 (other metric extreme 2.4) at 2432. Down 10% in a month. BEARISH (one had a week to exit with minor losses)
- 1.91 on 4/1/16. 3038 BTK. 7% rally within 3 days. It took a month to go flat. Down 3-4% from start after that. ST BULLISH
- 2.31 on 6/2/16. 3328 BTK. So higher from last reading. Immediate down 2% and back to flat before hitting low down 16%. VERY BEARISH
- 2.35 on 7/12/16 at 3189. Down 2% next day. Now down 1%. ????????
Unfortunately, trying to be unbiased, this bear market scenario in bios has many more attributes that match 2000-2003 than it does that match 2008-2009. If so, this trendless choppiness with 15+% moves is probably with us for a bit longer. I do not like the opposite extremes in last few days either. I want to calm things down to balanced moves. Unfortunately, that might not be possible given the move to the extremes in this ETF/algo world. Kinda like politics.
I will maybe do a post on the extreme lows in next few days. It is equally interesting with extremes never even approached before hitting in January this year.
Jon |
