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What Yesterday's Fear Didn't Have

When fear nudges its way into the market, panic selling often appears.

But what if there is a rash of selling, and the level of daily New Lows on the New York Stock Exchange barely budges?

That is pretty much what happened yesterday when the New Lows went from 21 on Monday to only 30 on Tuesday.

  • Strong rallies have New Lows below 28, with 10 or below being particularly strong.

  • Slightly above 28 needs to be watched, and a level of 40 to 50 can be associated with a market weakness condition where the potential for further deterioration can occur very fast.

  • Above 50 is trouble and you should be prepared for a dropping market.

Many investors would have guessed that the New Lows were above 50 yesterday, but they weren't.

In fact, they were only at a level of 30 at the close. Being only 2 points above our 28 level essentially comes in at a Neutral level.

It is 12:30 PM as I write this ... so what about today? Well, at 12:30 PM, the New Lows were at a healthy 11. So, the sky wasn't falling either yesterday or today.

S&P 500 SPY Chart - New Lows actual daily values

 

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