NYSE Advance/Decline

Scary drop, isn't it? In my previous "Technical Analysis" report I have expressed my opinion about oversold market and possibility of recovery. Actually we had 3 days of up-move, yet, it was quiet recovery not a strong one as I expected. Today, in one trading session all gain of the previous 3 days has been wiped out. That is why I always mention that charts should be monitored on daily basis which should provide you with ability to spot in time changes in the sentiment.

From one side today's drop is very scary and I am sure it pushed many traders into panic. From other side it completes the picture. I usually do not make posts during the week, yet today is very nice days from the advance/decline data prospective. Today advance decline volume and issues data have hit very low levels. It happened not only on the S&P 500 index but on all major indexes and exchanges. It was on October 15, 2008 when I saw last time such low advance decline readings on the NYSE Composite Index. Other low NYSE advance/decline readings (yet not as low as today) were noted on November 12, 2008 and on July 22, 2009.

History shows that such low advance/decline readings, especially in the NYSE Composite index, suggest strongly oversold market with high odds of close recovery. So, even the today's drop looks very scary it made me optimistic and I would not bet anything on short trading now.

For reference: Advance/Decline Quotes.