Market Internals 2011-06-19
By LawrenceFollowing is the chart posted here back in the beginning of May from a previous Market Internals Update.
Who says breadth analog models do not work?
The Tick16 Short Term index is showing extreme overbought condition.
No typo. Overbought it is. 2 known ways to resolve this from historical data.
1. One last flush is needed to finish this drop. That will take S&P 500 down a total of 10 to 12% to finish off this drop. Currently S&P is down about 8 to 9%. If we get the flush, the market will find its bottom quickly and rally from there.
2. Someone put a floor to the market here. It happened before during various crisis that the stock market could just stuck there while the whole world falling apart. After the crisis is over, however, the market will be stuck here for a long time as many investors will no longer want to participate in something they cannot trust.
Tick indices showing extreme selling so far yesterday and today.
Yet price is not printing lower.
So the tick16 can be corrected without lower price now as long as they repeat this trick of afternoon rally.