Identifying Bear Market Bottoms and New Bull Markets by Paul Desmond

Posted on by Jason Leavitt

Here’s a link to a report written by Paul Desmond of Lowry’s about using 90% up/down days to help identify bear market bottoms. The report is posted for free at Lowry’s, so I don’t think I’m violating any copywrite laws by posting it here. It was written in 2002, and other than my desire to get the author’s opinion as to the effect of high frequency trading, I believe the info is still relevant. Come back and post your comments.
IDENTIFYING BEAR MARKET BOTTOMS AND NEW BULL MARKETS

0 thoughts on “Identifying Bear Market Bottoms and New Bull Markets by Paul Desmond”

  1. “Investors should be wary of upside days on which only one component (Upside
    Volume or Points Gained) reaches the 90.0% or more level, while the other component
    falls short of the 90% level. Such rallies are often short-lived.”
    Amen
    Jason thanks for posting this link.

  2. re “We also compiled the full and fractional dollars of price change for all NYSE-listed
    stocks that advanced each day (Points Gained), as well as the full and fractional dollars of price
    change for all NYSE-listed stocks that declined each day (Points Lost).”
    Does this read to everybody as Points Gained = “sum for up stocks of ((close today) – (close yesterday))”, and similarly for down stocks, else what does “full and fractional” mean?
    And, without any guidance otherwise, this is an unweighted sum?
    I can only think that HFT does affect this a lot as it probably exaggerates normal movements.
    In fact, this nanex analysis is worth a look (declining emini volume and depth to Aug 5th).
    DaveT

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