Breadth is not yet registering extreme levels, but it is at a level that tends to be associated with bounces.
The decliners indicator (green line) closed above 84. At this level, we can expect better than average returns over the next 10 days. Closing above 90 would register an extreme and would constitute a high likelihood of a bounce.
The number of stocks above their 5 day moving averages (red line) closed at a level that has been associated with bounces in 2012. However, this indicator can go much lower, as shown in 2011.
With the market showing slight gains today, we should see these indicators move into neutral territory, if the gains are held. I again reiterate that we are in bounce or die mode. The level these indicators closed at last night is good enough to support a 2 to 3 day upswing. If we do not get that, more downside is probable, in my humble opinion.Comments »