Wednesday, August 8, 2007
You can see from the first chart how unusual the the breadth extreme was during the recent decline. In the past these kind of extreme spikes have signaled the exact bottoms. The only exception was the 04 period. However there was a strong rally after the 04 spike down. Now look at the second chart. This signal was slightly different than other spikes in that the market moved down into a lower low but the NYHL diverged and made a higher low. The odds seem to suggest that we've probably made the low or at the very least we should bounce strongly before the market can work lower again.