Market Internals Point To A Significant Bottom

By Liz DeMera

There has been many positive developments that have taken place in the internals of the market. The first one was when the market was on the lows (Down 65 Dow Points) Friday morning it had less NYSE 52 week lows and  breadth (advancing and declining stocks) showed improvement. What that tells me is that the  selling of  some stocks  is clearly starting to diminish.

Judging by the market internal charts below as everyone of them is clearly telling  a story that we have  a market that is due for a bounce.  I will say that sometimes the  market will  bounce up then and come back down and take out prior price levels, which would set itself up to be very bullish in the intermediate term. That kind of price action would just confuse the bearish crowd even more while the positive divergence are setting in nicely.  See SPX chart below to better illustrate what I mean about past instances where this has happened.

The second chart is an updated NYSE Summation bar chart that now needs only +2500 advancers to halt the slide of the NYSE  Summation Index . One thing I have seen in the  past is that this will reach a maximum oversold (Big Spike ) we got that big spike  last Thursday, and then the market rallies as stated above and comes back down and this will have a lower peak (spike) on next trip down, because breadth has  improved a positive divergence.

The next chart represents the NYSE HIGH/LOW Ratio indicator as showing close to a bottom too.  

The final chart represents the oversold nature of the market as a 10 Day Moving Average (blue line) with Advancers/Decliners and  3O  Day Moving Average (Red Line).  So the question begs, do you want to buy now or wait until the herd wants it?   I am a buyer when I see this sort of a setup.

 

This was written by Liz DeMera , who uses market technicals to determine the stock market's performance. She can be found on twitter where she often posts charts and valuable insight on market internals.