Here is an indicator I watch over the long term: a ratio of the monthly cumulative advancing versus declining volume.
This indicator does not go too far below the 0.8 level during bull markets so, whenever it does, it means a bear market has started.
Since August 2007 it has given such a signal three times (purple rectangles). The first one was great, the other two fakes.
Currently, the ratio is again at the level that should not be crossed during bull markets (green horizontal line). It has reached it as the market only corrected 4.50%, which is very fast compared to its behavior since March 2009 - hence, the headline of this post.
Usually a normal bull market correction would end with this indicator oversold but if this correction is not over yet the indicator has every chance to signal again a bear market.
Will it be a fake once more or will the third time during this bull be a charm?
No comments:
Post a Comment