Geoff Garbacz: For the past several weeks, we played some “money ball” in this column as we looked at some of our proprietary statistics to explain market behavior.
This week we’re delving into the issue of how to short stocks, a timely topic given the recent weakness in the stock market.
The other stat I like to track is how many down days we get a month, which we’ve discussed from time to time in this column. Since this massive rally started in November 2012, the S&P 500 has a median of 8 down days a month and an average of 9.06 down days a month.
For January, there were 12 down days for the month, making it the second month in a row with 12 down days.
Now, with a loss of -2.28% on Monday for the S&P 500, February could set up as a clustering event with more down -1% days in the month.
How Many (More) Down Days Could February Bring?
The fact that December and January are deviating from the median we saw in late 2012 and 2013 could be an omen of a potential change in internal market action to the negative.
So, we need to watch this trend closely. A reversal of this pattern would be nice for February from the bullish viewpoint.
Last week we also looked at the retracements that could come into play here. The retracement on the December low to December high was the current retracement in play.
It got blown out of the water on Monday. So we now have to focus on the October low to December high.
The 38.2% and 50% retracements were violated Monday and the 50% retracement was retaken on Tuesday. It would be nice if the 38.2% level could be retaken in short order.
In 2013 the average pullback, of which there were five (and now six), saw the S&P 500 drop an average of -4.31% and a median of -4.12%.
So with the current pullback dropping -5.76%, we are at the extreme of the range. It is ironic that the current pullback is EXACTLY the same as the May/June pullback.
What is more telling about this pullback is that, currently, still only one sector out of 24 has more than 50% of the stocks above their 50-day moving average.
Also, only now four from 12 of the 24 sectors have more than 50% of their stocks above their 200-day moving average. This correction has been a much-bigger “stealth correction” than the indexes would lead you to believe.(...)Click here to continue reading the original ETFDailyNews.com article: S&P 500, Dow Jones Industrial Average: How Many (More) Down Days Could February Bring?You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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