We had another market sell-off today that led to more extreme breadth readings.

After today’s beating, only 175 stocks up 25% or more in the last 65-days. This breadth indicator was created by Pradeep Bondee along with other handy breadth indicators, you can check them out HERE. 

In the past when we’ve had less than 200 stocks up 25% or more in the last 65-days, it led to significant bounces, this is just another form of capitulation.

Can we go lower? YES. But the risk-reward from here is tilting in the bulls favor.

Let’s look at some charts so we can see what has happened after we’ve seen readings of less than 200 stocks up 25% or more in the last 65-days.

2014 to present;

 

The 2011 sell-off was a big one, and at one point only 96 stocks were up 25% or more in the last 65-days, you can see what happened after that.

In 2010 we had the flash crash, and pulled back 15.5% in about 2-months and on 7/2/10 we only had 196 stocks up 25% or more in the last quarter.

Can we go lower, yes of course, but here’s a chart from Sentimentrader of the price path of the last 20-bear markets since 1950.

What about if it turns out to be one of those rare 30-50% declines? Click—>  The s&P500 is down now down -15%, What’s next?

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