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mortiz

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Reply with quote  #1 
Fed market reactions have a habit of reversing themselves in the short term, but the preliminary WSJ NYSE Up to Down volume ratio is about 30 to 1.  You have to go back to 1982 (hmmm) to find a plurality to match that magnitude.

This likely bodes very well for the long term.

FWIW

Randy
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GarySmith

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Reply with quote  #2 

This is the fourth in the present cluster of 9 to 1 days.   Whether you bought on the first or the prescribed second,  you would be dancing in the streets today.  Zweig's momentum indicator has such a great track record, especially over the past year and a half, yet so many seem to ignore it.  I would have to check your research Randy but as I recall the one in August 82 was the greatest breath thrust ever and launched the bull market that made so many "bagholders" millionaires. 
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mortiz

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Reply with quote  #3 
Gary,

I go by the final WSJ numbers that will be posted in about an hour, but the NYSE daily data dumps show a NYSE up-down volume plurality of 30.1 to 1.

Since 1960 a 30 to 1 or better up-down volume ratio has happened twice:

1) August 17, 1982:  41.9 to 1

2) August 20, 1982:  30.4 to 1

We know what happened after that, but for those readers who may not have been around in 1982, that was the kick off to the great bull of the 80s and 90s and the end of the great bear market that began in the late 60s.

Heck, even RUT had close to a 10 to 1 up to down volume plurality today, another rarity.  Long term, today's action will likely prove to be a very big deal for the bulls.

Randy
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wyocowboy

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Reply with quote  #4 
  I hope that people continue to ignore it and that Desmond and Davis continue to doubt it.......
  I wasn't dancing in the streets, but I sure as hell was hopping around in my basement today....
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Remo

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Reply with quote  #5 
Very interesting indeed!

It's amazing how almost every technical tool has been and is pointing to significantly higher prices in the future and yet people keep on ignoring them and look for reasons to stay bearish. As far as I know, this is the only discussion forum, where the majority of contributors have been constatly right on the market and called bottoms when others have been busy shorting them . A true treasury chest when it comes to technical analysis!

I guess this bull really kicks in when we make new All-Time-Highs on S&P500?
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mortiz

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Reply with quote  #6 
Gary/Wyocowboy/Remo,

Let's keep this volume plurality stuff to ourselves, and publicly agree with the many naysayers that historical precedents aren't relevant .

The "official" WSJ UD volume plurality ended being 29.83, but with the data the NYSE itself releases, a plurality of 30.1, I think we can call Tuesday's action a 30 to 1 up-down volume day.

As suggested earlier, such events are rare, about 17 times in the 1940s, four times in the 1950s, and the two in 1982.  The 1940s markets were extremely volatile and historical studies over the WWII period in particular, are all over the map, and rarely provide consistent forecasting results.

Since 1950, 30 to 1 up-down volume ratios are kind of interesting, the occurrences:

December 1951: 34:1
January 1952: 35:1
October 1957: 41:1
November 1957: 36:1
August 17, 1982: 42:1
August 20 1982: 30:1

Tuesday's plurality of 30 to 1 is on the low end of the range over the past 57+ years, but note how these past extremes came in pairs, within six weeks of each other..... if history repeats, another one coming?

Here are the average returns of the past 30:1 UD volume days, calculated using the closing SPX price the day of the event as the reference:

1 month later: 6.15%
3 months later: 9.87%
6 months later: 17.85%
9 months later: 29.68%
12 months later: 34.56%
18 months later: 35.82%

As usual, rare events do not provide much of a sample space, but there are the average returns if you bought the SPX at the close on the 30:1 UD volume days since 1950.

Tuesday's NYSE $weighted UD volume ratio was over 44 to 1, up to down price change only ratio was 34 to 1, and the volume weighted price change ratio was 109 to 1, so quite a display of buying power. Breadth-wise, the NYSE composite AD ratio was 8.8 to 1, but with bonds being a bit soft Tuesday, the bond CEF and other debt related issues held the breadth plurality down.  Eliminating the "pure" debt issues from the breadth numbers, the plurality was 17.5 to 1.

It will be interesting to see if a repeat of Tuesday's thrust unfolds in the coming weeks... if that would happen, remember the returns listed above.

Thanks for the feedback.

Randy




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wyocowboy

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Reply with quote  #7 

  As of today, Oct.3, my read on sentiment is that it is pretty much neutral, with the longer term indicators still positive. The power of the volume thrust is still in the works, and stops are far enough away to scare me. On down days, I walk away from the computer and do something else - that stops me from anticipating my stops will be hit, and provides an unbiased base to look at the closing numbers. So far, this has worked quite well - the market has come within a few cents of knocking me out, but the next day has always been resoundingly bullish. Hopefully, this will continue for awhile.....

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Remo

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Reply with quote  #8 
Mortiz (09/19/07 at 03:11 PM)

Quote:
Tuesday's plurality of 30 to 1 is on the low end of the range over the past 57+ years, but note how these past extremes came in pairs, within six weeks of each other..... if history repeats, another one coming?


If one can predict such extremes at all, I think we have another one coming within few trading days, IMO... To me it seems that now we have almost perfect setup for major upthrust in major market indices. Next Tuesday or Wednesday would be ideal

We'll see
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