Market Internals 2011-06-05

Many asked for an update on the reading of the Daily Breadth Chart. Here it goes.

Since last update,

1. The selloff – checked
2. The bounce – checked
3. The What-If – TICK16 Short Term failed to hold above neutral for even 1 day, so the bearish scenario unfolded

Now,

Both 3-Day Advance Issues and TICK16 ST are oversold, on the first uptick on either one we get a bounce of at least 20 to 30 pts.

The better measure is percentage as longer term charts works better relative to percentage changes. Thus I am looking for a bounce of at least 1.5%.

If the bounce is capped at 2% or lower, the market will turning into melt down mode and we get down 8% and then 12% from the highest close quickly.

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