Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: JRI who wrote (74847)	4/13/2001 11:18:29 AM
From: Les H	Respond to of 99985

It's not indicative of the magnitude of the sell-off. It's just that the probability of further upside is reduced. At each extreme, it's often difficult to know what will fuel additional momentum, such as more short-covering, margin calls, exogenous events, etc. It's just that the signals are more reliable when the S&P 500 and the overall database approaches 80% of the signals. Short-term tops are also accompanied by high percentages of stocks above their 21-day moving average. I use 70-75% as a threshold for caution and scale out from that point forward. High numbers for breadth probably indicate that stock has been distributed to the public, and low numbers probably indicate that stock has been accumulated from the public. I've found that typically the S&P 500 will sell-off about 7-10% from peak to trough when the database gets around 80% individual stock sell signals. The S&P 500 has run from 1080 to 1180 intraday and from 1100 to 1180 end-of-day from when the signals were predominantly buy signals.