The market had a rubber band style rebound yesterday, quite frankly we were stretched and due for a bounce. The Dow Jones was up 4.98%, the S&P-500 +4.96%, and the Nasdaq was up +5.84%.
One breadth indicator that caught my attention was the number of stocks up 4% or more on the day; this is a Pradeep Bonde indicator you can learn about it HERE.
One thousand seven hundred seventy-nine (1,779) stocks were up 4% or more yesterday; this is a huge amount, only a few times in the last 8-years have we come close printing a figure this high. Not surprisingly, these huge prints came when the market was under severe pressure. Sometimes this type of panic buying marked the bottom other times it did not. Below you can see what’s happened after such panic buying.
Here you have the highest readings from 2014 until yesterday, click to enlarge.
Here’s a closer look at those big up days plotted on a $SPY chart.
Here are the dates from 2011 when we got huge spikes in stocks up 4% or more for the day.
Here we are zooming with the dates plotted on a $SPY chart.
Volatility is here to stay in the short-term, back in 2011 right before a short-term bottom, the $SPY lost -6.5%, the next day it gain+4.6%, the next day it lost -4.4%, the next day it gained +4.48%. It’s going to be volatile.