Swift, Severe Decline; Up Volume Thrust; Low TRIN

This is an abridged version of our Daily Report.

Stocks just suffered one of the largest, swiftest pullbacks in 70 years

The S&P suffered a 17% loss in less than four months.

That’s unnerving but is not the kind of decline that happens before or during economic recessions. They are mostly financial-panic related and have had a strong tendency to quickly reverse. The sample size is tiny, but the results were extremely consistent. While there was a lot of shorter-term volatility, the skew was unquestionably to the upside, and tests of the panic low over the next few weeks were quickly passed.

Breadth thrust higher on Wednesday

After the Up Volume Ratio recorded one of its lowest-ever readings over the past 10 sessions, Wednesday saw more than 95% of volume on the NYSE rush into securities advancing on the day.

The focus on advancing stocks caused the Arms Index (aka TRIN) to plummet, following a series of elevated readings. This kind of sudden switch from focusing on declining stocks to advancing ones, has been a good sign.

Wednesday was the most-positive day within the S&P 500 since at least 1990

Out of 505 stocks in the index, 504 of them closed higher than they did on Monday. No other day has seen more than 496 of the index’s stocks rise in a single session.