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Yesterday’s Fed rate cut of 50 basis points (which I predicted based on the fixed income market) threw the market into a buying frenzy. It carried over into today’s session also, but yesterday’s was absolutely breathtaking.
There were many remarkable statistics generated but what I found most interesting was the volume skew. Believe it or not, up volume outpaced down volume by a 25 to 1 margin.
To call that extreme is to not do justice to the term. According to Jason Goepfert, the last time we had this much lopsided volume to the upside was in August 1982 - just before the great bull market of our generation was stoked.
Since 1950, there have been 6 other times this has happened. Each and every one of them also gave a positive performance in the next 3 months time.
Looks like we have once again confirmed the Lowry’s 90 90 up day that I was looking for. I expect we’ll pull back from here as the market digests the “surprise”. Historically the short term picture is mixed. But if we follow the script the market has played out before, we are in for a sweet rally in the coming months.
Here are the charts for Nasdaq and NYSE breadth:
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