A take on todays market action

“On today’s close, our short-term Pressure Factor hit an extraordinary oversold -169 [normally, -80 is an “extreme” oversold reading]. There were only six occasions in the past 60 years when the Pressure Factor has dropped below -160. Here are those initial dates: June 9, 1953; October 19, 1987 (after Black Monday); October 27, 1997; February 27, 2007; December 1, 2008; and June 4, 2010 (last summer). None of those instances saw the S&P even 1% lower one week later. Only one instance saw the market negative one month later – last summer which marked the correction bottom. And interestingly –perhaps coincidentally– 5 of the 6 saw the market up over 19% twelve months later. Such oversold extremes typically do not market the beginning of a bear market.”

I subscribe to a few services and this is a comment made from on of the ones I subscribe to. I have to caution you though these are of course not 100% predictive! But something to think about if you consider selling into a panic.

Of course…..as long as you have proper money management in place there would be know reason to panic.


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  • Adam

    How significant is it, Rick, in your opinion, that 4 of those instances are in the last 4 calendar years, so 4/7 of the sample is from 4 years, and 3/7 is from the other 56 years? Wondered if you had some insight as to why things seem so bumpy these days in comparison to looking at historical statistics like this one? Thanks

  • Joe

    Rick, just a note but you bought TSN for 18.50, not 18.39 or what was listed on the spreadsheet. Just wanted to point that out for your records, sure it was a mistake.

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