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.

Extreme Nasdaq Breadth Suggests Higher Prices

While most everything did well on Thursday, much of the excitement was directed towards smallcaps and Nasdaq stocks. Below is a little study that shows how the market has performed in the past following such buying interest in the Nasdaq while the S&P 500 was in a long-term uptrend.

Instances are lower than I’d typically like to see, but with all 7 closing higher in the next day or 2, this study appears worth noting. 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.

Of course the jobs report may have a little something to say about today's action as well...

Strong Nasdaq Breadth Intermediate-term Bullish

One of the positives I'm seeing in the market right now is the extremely strong breadth. In the last week or so several breadth related studies have triggered that suggest more upside. Below is a study from the 2/6/09 Subscriber Letter. It was identified last night by the Quantifinder for both gold and silver subscribers.

The study uses an indicator that I track on the charts page. It looks at the % of Nasdaq up volume on a daily basis. It then calculates a 10-day ema of the result. (I did not have time to update the results this morning.)

The long-term implications were strongly bullish. The very short-term was questionable, and there was often a bit of a pullback at some point early on.