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Lowry Research Update: Buying Power Exceeds April Highs at Trader’s Narrative

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Here is a quick update on the latest recommendations and market position from Lowry Research, the oldest technical analysis firm on Wall Street:

  • Lowry primarily relies on their proprietary Selling Pressure and Buying Power indexes to gauge market state and direction
  • these are Lowry Research’s measure of primary trend of investor supply and demand
  • It is calculated using volume of stocks closed higher/lower and points gained/lost
  • This is then smoothed with moving averages (50 trading days)
  • Demand has been and continues to be in control
  • Lowry believes that the market has a chance to move to April highs and beyond
  • Buying Power exceeded its April high as of last Friday’s close (July 23rd)
  • Yesterday it moved even higher
  • Basing pattern or top?
  • When market rolled over in April and we had sharp declines many thought primary trend had changed
  • It looked like cyclical bull market was over
  • But Buying Power improved and Selling Pressure continually deteriorated after hitting a peak in late May
  • Selling Pressure index reached a new low on Friday
  • And it is very close to moving below its April low

SPX lowry selling pressure buying power Jul 2010

  • That would be a very positive sign for the longer term outlook
  • Instead of distribution, which precedes another leg down, we have accumulation (which precedes a new move higher)
  • Things to watch out for: a return to a series of 90% downside days with no intermediate rally
  • If we see panic selling it should be typically followed by a 2-7 day rally to indicate selling is exhausted
  • Last 90% downside day was July 16th
  • After, we saw immediate upside follow through
  • We had a 90% upside day follow indicating demand quickly came back
  • During the decline into early July’s low, we saw 90% downside days that weren’t reacted to with a one day rally - no one wanted to “buy the dip”
  • Now things have changed but if we see 90% downside days return without a reprise then outlook becomes more negative
  • re market volume and summer vacation: it isn’t that low, especially with proliferation of 90% upside days coming on with strong volume
  • Remember that from March 2009 low, volume has been relatively low for whole cyclical bull market
  • Lowry’s intermediate buy signal on Aug 4th 2009 began 5 stage buying program completed Sept 18th 2009
  • There has been no intermediate sell signal to negate bullish position on market
  • Lowry remained 100% long during recent volatility
  • Another positive: S&P 500 clear 200 (simple) moving average
  • Also, short term demand upsurge, risk has decreased for entering new positions (long)

Interview with Tracy Knudsen of Lowry Research:
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2 Responses to “Lowry Research Update: Buying Power Exceeds April Highs”  

  1. 1 Kingfish

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    thanks for following Lowry

  2. 2 Tony

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    IĆ© read a few days ago that short selling was at Aug 08 levels.. anything to do with this “buying power highs”?

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