Thursday, April 15, 2010

Nasdaq Breadth Hits an Extreme

I’m seeing mixed indications for the short-term over the last couple of days. One bullish study that the Quantifinder identified last night was from the 11/6/09 blog and examined the exceptionally lopsided Nasdaq Up Volume %. Readings over 90% are quite rare – especially so when the market is in a long-term uptrend. Below I have updated the November study.

Instances are lower than I’d like to see, but with all 8 closing higher in the next day or 2, it appears worth noting this one. Extremely strong volume breadth going into riskier Nasdaq stocks has often led to some follow through when the market is in a long-term uptrend. Below I have listed all 8 instances with a 3-day exit.

Especially notable to me is the fact that the worst drawdown for any instance was only 0.85%. Meanwhile, only 1 instance didn’t see a run-up of at least 1% within the next 3 days. This suggests limited downside potential and solid upside risk/reward.


Rennie said...

Hi Rob - I'm showing only 86% up volume on the NASDAQ for Wednesday.

Rob Hanna said...

It will vary slightly depending on your data provider. My showed just over 90%.