SmarTrend Weekly Statistics for Feb. 8, 2010
Last week the total number of stocks in a Downtrend surpassed the number of total Uptrends for the first time since early November 2009 after the market's last correction of about 7%. During that correction, the SmarTrend Ratio (total number of Uptrends as a percentage of all trends) fell to a low of 47%. Last week, the SmarTrend Ratio fell to 43.5%, down from 57.4% in the prior week. This suggests a bit deeper pullback than the one experienced in late October. As a type of oscillator, this ratio tends to signal reversals when it reaches extreme negative and positive levels. The key will be to watch when the number of new Uptrends starts to outpace the number of new Downtrends. This data can be found each day in our Morning Call newsletter where we also provide insight into the prevailing winds and when they may shift direction. As the market continues to digest earnings reports and troubles abroad, the tendency to dump stocks first and ask questions later has led to further declines in equities last week. The drubbing was partially saved by a late-day reversal on Friday as short sellers covered positions into the weekend in the event European nations righted their Greek and Portuguese ships. We will see whether or not it was completed to the satisfaction of all market participants and closely watch for a reversal in the SmarTrend Ratio as a signal that buyers are willing to step in and buy stocks that are, on average, on sale by nearly 10%. Check our Morning Call for our latest view on these global events and their impact on our SmarTrend Ratio and other proprietary indicators.
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