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mortiz

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A quick note on the consequences going forward when the NYSE ratio adjusted MCO (RAMCO) reaches negative extremes below -100.  This topic has been discussed before on TW in more detail, but cannot locate the posts.

In late July 2007, the NY RAMCO reached -103 which usually points to a lower price low 2 to 4 months later than the price low printed when the initial RAMCO extreme was posted.  May 2004 is the most recent example, another RAMCO extreme below -100 occurred in March 2005... which did not result in lower price lows in the following 2 to 4 months.  The March 2005 extreme was preceded by a bullish McSum 3-step pattern and an AD line that was very strong. 

One can research and find many examples through history of negative NY RAMCO extremes telegraphing lower price lows within a four month time frame.

The July 2007 RAMCO extreme was not preceded by strong liquidity, thus the probability is high the August 2007 price lows will be violated by a couple percentage points.



Something to think about for those intermediate term investors tempted to perform falling cutlery catching acts in the near term.  The market also needs to endure more severe panic than witnessed thus far before the 9-month cycle lows are in. We are likely getting closer to the cycle lows, but the bears are likely going to be active for bit longer before hibernation time.

FWIW

Randy
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