NYSE % of stocks > than 200 Day Moving Average
NYSE % of stocks > than 200 Day Moving Average
chart courtesy of Fusion IQ
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As seen on the chart above the percentage of NYSE stocks > than their 200 day moving average has slipped (not incl. today) to almost 20%. This reading is similar to readings at other past significant lows such as the 1998 low and the 2002 low.
That said we don’t think we have seen the absolute low in the markets yet given the recent trend line break in the S&P 500. However, given these indicator readings we are starting to see the signs of a capitulation building -- one more shot down may be necessary to set a better, more solid low.
NOTE: When the % of NYSE stocks over their 200 day moving average drops to ~20%, it gives a reliable buy signal . . .
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UPDATE: January 17, 2008 4:00
This is a 10 year, weekly chart. I thought that was self explanatory, above. Some of you seem, tot hink this is a bottom call right now. It is not precise to the day. When you look at the 1998 and 2002 lows, these are processes that develop over weeks and months. I thought that was clear from the graph, but apparently a few of you misunderstood it. I regret any ambiguity.
Thursday, January 17, 2008 | 11:00 AM | Permalink
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» Do they ring a gong at the bottom? from A Dash of Insight
Trading lore says that they do not ring a gong at the bottom. At A Dash we are interested in any successful approach -- fundamental or technical. We are open to human interpretation of data and that derived from systems. [Read More]
Tracked on Jan 17, 2008 11:09:21 PM
Comments
One more shot down...
...watch that last step, it's a doozy.
Posted by: Marcus Aurelius | Jan 17, 2008 11:08:14 AM
This chart does not reliably call any significant top or bottom. It generally shows 2003 (highest reading on chart) to be a terrible time to buy stocks, when in fact it was a great time. The time period of the chart also coincides with the biggest stock and real estate bubbles of all time. This indicates potential oversold condition, but in a bear market, market can remain oversold for a long time.
Posted by: Steve Barry | Jan 17, 2008 11:16:46 AM
Do you have a chart on the number of stocks below their 200 day moving average that covers periods in which the financial excesses leading up to the low were comparable to the present era? For example 1974, or 1942, or 1932...
Posted by: Rod Roth | Jan 17, 2008 11:21:49 AM
Economic stimulus package on the way, baby! Of course it's full of the same exact stuff that got us here in the first place.
Posted by: GRG | Jan 17, 2008 11:37:06 AM
ISEE put call hit the low 20's today...the prior lows had been ~ 50. It is considered bullish below 100.
Posted by: Fred | Jan 17, 2008 11:37:38 AM
Louise Yamada saying sell any rallies, big leg down coming. anyone know her exact call? heard refernce on Bloomberg this morn
Posted by: scorpio | Jan 17, 2008 11:42:36 AM
Good chart. We'll see how today ends. The capitulation is close. Nobody acts as if the dip is only a blip anymore. Most appear to think that a rising market is long off or, as you, are talking bottom.
Money has to go somewhere and stability invites risk. No more NEW bad news invites stability.
If I called a bottom too early, shame on me. I know it is close and I still have a lot of cash ready to go for another buy. Plus, the bottom is near, if not here. Thus, I still will make an excellent return by, if not well before, end of year. Especially when the dogs I bought turn with an improving economy. All are well below normal averages and the US Economy is only temporarily slow, not going out of business
Posted by: cinefoz | Jan 17, 2008 11:44:51 AM
cinefoz says:
Plus, the bottom is near, if not here.
THE bottom, or just A bottom. This market is not priced for a recession yet according to people a lot smarter than me.
Posted by: Auto Mechanic Guy | Jan 17, 2008 11:51:30 AM
Interestingly, many stocks have broken down but the major averages have been OK (well, relatively speaking). I wonder what happens when those few stocks holding up the averages really start to falter.
Posted by: Mike M | Jan 17, 2008 11:54:42 AM
I'm not clear Barry, do you agree with Roth of Miller Tabak, or do you think he is overstating it? You make it sound like we're just about there...he makes it sound like we're going to take a big dive...
Miller Tabak's Roth says the S&P 500 may fall as much as 15 percent in the next three to six months. The percentage of stocks trading above their 200-day moving average is still too high to signal a market bottom, he said.
About 21 percent of the shares on the New York Stock Exchange were trading above their 200-day moving average as of Jan. 15, according to data compiled by Bloomberg. That compares with 16 percent when the S&P 500 fell to its bear market bottom on Oct. 9, 2002.
``There's been tremendous naivete and complacency about the market and it's gradually dissipating,'' said Roth, 43, chief technical market analyst at Miller Tabak in New York. ``More than likely we'll have a number of weeks of recovery at some point and then another leg down.''
Posted by: Auto Mechanic Guy | Jan 17, 2008 11:55:22 AM
today's loss is just the loons who thot that Ben would save them today, or tomorrow, or the next Fed mtg or the interim cut AD NAUSEUM. the reason he hasnt cut today or yday or tomorrow is he knows he's got few arrows and this economy is coming unstuck NO MATTER WHAT HE DOES.
Posted by: scorpio | Jan 17, 2008 11:55:52 AM
Scorpio:
http://www.bloomberg.com/apps/news?pid=20601213&sid=aHFBLSj_SzRU&refer=home
Bloomberg has an article if the link doesn't work
Posted by: Auto Mechanic Guy | Jan 17, 2008 11:57:54 AM
No one really knows how bad this is going to become, however, I think the permabulls are just now starting to understand that the current market prices are unsustainable. I wouldn't be surprised if we saw a serious run on the markets in a short period of time.
Posted by: Donny | Jan 17, 2008 11:57:55 AM
bernanke should stop talking and start cutting.....hes fiddling like nero while rome burned
Posted by: jake | Jan 17, 2008 12:07:28 PM
The bottom will not be here until there is an actual public panic.
For your comfort--the panic is almost here.
Posted by: Neal | Jan 17, 2008 12:07:38 PM
The bottom will be made when nobody believes a bottom can be made. Need "bids wanted" from the dealers and gap down situations. It's coming, but noone will trust it when it does.
Posted by: Matt M. | Jan 17, 2008 12:11:24 PM
Auto Mechanic Guy,
Believe it or not, extreme fear is a good sign, providing new bad news stops arriving in the same quantities. Nobody has a crystal ball, but history and common sense are good guides.
1) The stock market will not fall to zero
2) Once interest rates drop, buyers will enter the market. This will bring more buyers.
3) In spite of the terror talk on the financial networks, a lot of people still have equity in their homes. Not everyone is a subprime pauper. Low rates will bring out the home equity borrowers.
4) A lot of industries are still making money, just a little less at this time. Making a little less is not the same as losing money.
5) A lot of stocks are dirt cheap right now. Even if they go down a little more, they will eventually rise to more normal levels. This is a tremendous buying opportunity.
6) Recessions have massive layoffs. Outside of finance and homebuilding, where are they? Last dip, it was common to read about 20,000 people being laid off, multiple times per weeks from different companies. Now, if 130 people get laid off it is front page news.
7) The drop in the Baltic Dry Ship Index is not quite as significant as you might think. Chart footnotes say the dropoff is due to a cutback in red hot demand plus NORMAL SEASONAL SLOWDOWNS. It may look scary, but it isn't as bad as it looks.
8) The market may not be priced for a recession because one is not coming?
Posted by: cinefoz | Jan 17, 2008 12:16:21 PM
no one says the market's going to Zero. what if SPY falls to 800 like 10/02? or to 450 like 1995, when this bullshit run began? put up a long-term chart of the market. we're sticking out like crazy since 1995 and looks like a long way down from here.
Posted by: scorpio | Jan 17, 2008 12:20:55 PM
cinefoz-
#6 does it occur to you that the reason we have not seen that yet is that may be our wonderful way of reporting on "job creation" does'nt really factor in the reality of business' already operating the "productivity squeeze" on it's current (about to be former) employee's?
#5 Totally subjective call...cheap in relation to what??? historical prices?? last 5 years?? (that doesn't mean much since we got here on cheap money and we are starting to see the effects of that).
#2 Buyers still have to qualify....no matter what the interest rate is. Just because we are mirroring Japan does'nt mean that these banks will all of a sudden begin to lend again. They are all in survival mode at this point.....lending money at lower rates is not something that will cause buyers to return. Lowering the inventory and dropping prices will help that but certainly not solve it.
#8 well it better pull it's head out of it's ass because we are in a bear market (the loss of the August lows) but I understand why they will not admit it because they have a system that is set up (at least now) to only realize asset appreciation....down is an ugly word so it's no surprise that we get two vastly different stories: one driven by data and economic indicators (reality) and the "trust me" story being espoused by the powers that be.
AS far as the Merril news today they still are clueless, CFO could'nt quantify it's remaining exposure and then Thain said, in essence, "we're ok with it"......exactly the same thing said by JPM yesterday.
In reality they are in the same position as C but with less exposure to consumer credit but the market reacts to Thain being a "more confident liar"........
Ciao
MS
Posted by: michael schumacher | Jan 17, 2008 12:31:22 PM
cinefoz, don't ignore the possible negative macro events on the horizon:
1. possible hangover for Chinese economy after rampant infrastructure buildup dissipates post-Olympics (think Y2K in US)
2. Deocratic takeover of exec and leg branches of Congress means higher taxes somewhere
Posted by: Adam | Jan 17, 2008 12:31:48 PM
Good chart.... However, 200 day moving average, or any other price moving average for that matter is meaningless.
Having said this, it would come as no surprise to see a short term correction rally in the next couple of days. This could happen from any price level basis the S&P.
The fact is that if we're not in a recession already we will surely be in a severe and extended one in the near future. I anticipate that this will be one of those economic slow downs that will be remembered in the history books.
Stimulation package....? I hardly think so..... ;-)
Econolicious
Posted by: ECONOMISTA NON GRATA | Jan 17, 2008 12:32:10 PM
Scorpio,
Look at a LOGARITHMIC chart, not a linear chart.
Why?
Assume a 10% gain on 1000. It is 100. Now, assume a 10% gain on 2000. It is 200. Both gains are 10%, but one gain amount is 100% greater than the other. When charting linear gains like that over a long period of time, you end up with charts that point upwards after a while.
When you use log charts, the gain or loss is normalized and you can see true relationships more clearly.
I see a rather benign chart using logs. Using linear charts I see a line going straight up, but the annual gains have not been the massive percentages implied by the slope.
Thus ends the math lesson.
Posted by: cinefoz | Jan 17, 2008 12:33:19 PM
As long as you're going to employ technical analysis, you might as well mention that the chart above looks like a ginormous triple bottom. As other commenters have stated, if you could zoom out to the beginning of the 20th Century, perhaps we could put this "range" in a more sample rich context.
Posted by: jf | Jan 17, 2008 12:37:33 PM
Adam,
China will not close for business after the Olympics.
Read some books, ok?
Posted by: cinefoz | Jan 17, 2008 12:38:43 PM
I don't believe we're seeing any signs of a bottom. Capitulation? None out there. Even though the selling has been steady, it hasn't been rabid; we have yet to see any sort of panic which has historically indicated a bottom.
Additionally, almost all sectors are in bear markets and have been for many months. And now the leaders are beginning to break down. Ags, which have been so strong, took a huge hit yesterday. Oils look like they could be topping. Big cap tech is getting slammed.
There have been no long-term bases in stocks or indices that are indicative of a bottom. Almost everything is a falling knife right now. While I expect we'll bounce soon, that is by no means a bottom. It will simply be a bear market rally and one that should only be bought by suckers.
We're only down about 13% from the top. This thing has legs.
Posted by: Peter Davis | Jan 17, 2008 12:39:30 PM
