How Long Do These Selloffs Last?

Wednesday, June 07, 2006 | 03:47 PM

Its always dangerous to try and guess precisely when a selloff such as this one -- a Selling Stampede in the words of  Raymond James’ Jeff Saut -- will end.

But Jeff has done some work on this issue, and he's made an intriguing discovery:

"Like 'buying stampedes,' selling-stampedes typically last 17 – 25 sessions, with only 1½ - 3 session counter-trend moves (rallies/pauses), before they exhaust themselves on the downside.

More often than not that downside exhaustion is punctuated with an 'I think I am going to be sick' downside hour or two.  It is also worth noting that once you get into one of these downside-skeins, if said stampede surrenders more than 5%, then the waterfall-decline tends to extend into a 10% or greater decline."

Today is day 20, according  to Jeff's count. That implies this will likely end sometime next week, with the 25th day coming on Wednesday, June 15.

Jeff notes, however, that some stampedes have extended for 25 – 28 sessions, but it is rare for them to go more than 30.

That means this is a probability play -- and not a sure thing . . .

Wednesday, June 07, 2006 | 03:47 PM | Permalink | Comments (36) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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Nice to see some empirical work from a good strategist .... tired of all the guesswork/theories

Posted by: BIG | Jun 7, 2006 4:02:29 PM

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