extremes description

INDICATORS AT EXTREMES

APPLICABLE TIME FRAME(S):

INTERMEDIATE-TERM (ONE TO THREE MONTHS)

UPDATE SCHEDULE:

Each weekday night by 7:00 PM EST

EXPLANATION:

On the Daily Overview page of the site, we present a graph that shows the percentage of our indicators at bullish or bearish extremes over the past five days.

This is computed by simply looking at how many of the indicators we follow are either bullish (for the market) or bearish (for the market), expressed in terms of the total number of indicators that we follow.

Go get a better feel for historical comparisons other than just the past five days, we show the longer-term version of the chart which goes back to 2000. This allows us to see just how many indicators it has taken in the past to become extreme before the market usually turns course.

At the bottom of the chart, we show the NET INDICATORS AT EXTREMES. This is simply the bullish percentage minus the bearish percentage.

GUIDELINES:

In general, it has taken 50% of our indicators to reach one extreme or the other before the market turns and forms a bottom (when 50% or more indicators are bullish for the market) or a top (when 50% or more indicators are bearish for the market).

We must always consider the overall market environment as well. In a strong bear market, we're probably not going to see 50% of all our indicators reach bearish (for the market) extremes before the market forms one of its intermediate-term tops...more like 25%.

And in strong bull markets, when the market undergoes one of its periodic dips, it's sometimes difficult to reach that 50% threshold for the percentage of indicators at bullish (for the market) extremes. Still, they are handy guidelines that work the majority of the time.

CLICK HERE TO SEE THE MOST RECENT CHART