Trader’s Narrative

Since the first week of the month, I’ve been waiting for a 90-90 up day, as defined by Lowry’s research. If you haven’t, make sure you follow the link to the report for all the details.

It certainly took its sweet time but we finally got it yesterday.

Here are the numbers:

On the NYSE, advancing issues were 84% and on the Nasdaq 74%. Advancing volume came at an eye popping 95% on the NYSE and on the Nasdaq, 89%.

This was even more intriguing because it followed immediately after a day which was its mirror opposite. We may have had a 90-90 down day, followed immediately by a 90-90 up day. Tuesday was a very skewed down day with more than 10 to 1 ratio in downvolume. And yesterday we saw pretty much the exact opposite.

This is very rare having only happened twice before in the past 40 years. But nevertheless, it is still a valid signal and a portent of better days to come.

Here is the chart for the Nasdaq breadth:

And the NYSE breadth:

The market seems to need these extreme up and down days to shake and bake both the longs and the shorts before it sets off on a new trend. I think of it as building up kinetic energy so that both sides will pile on and give the new trend momentum: the longs realizing that they should have bought more and the shorts realizing that they have to cover their positions (by buying).