On June 25th, I featured the Nasdaq McClellan Summation Index as it stood at -100 and wondered out loud if the coiling and tiny breakdown we were seeing then meant that we would see the same kind of breakdown in the market as last summer.
The verdict is in and yes, that was rather prophetic. Here’s what happened:
Although the index did fall precipitously, it is just shy of previous historical extremes (green box) that marked intermediate bottoms. But remember that the market, like history, rhymes, it never repeats perfectly.
Here’s the NYSE Summation Index:
The NYSE equivalent is in a much more extreme situation. It is pretty much where previous market corrections have run their course.
Both these breadth indicators are telling us what we can easily discern from the indices themselves: that the market has seen a tremendous amount of damage within a short period of time. And is now either at or very close to, an inflection point.
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