It's just a sensationalist thread title. TJ is an expert poster. What he is doing is trying to brainstorm a strategy if a bear does breakout. It's going to be a boring Summer unless the EM countries give us a surprise. That's actually where I want to make a low probability bet with a 6 month time frame. Any ideas? (Please, Greece is over done.)
To better understand the number below I have to explain that bearish stock below is a stock which is traded closer to its 52-week low. A stock which is traded closer to its 52-week high is considered bullish. Over the last 4 trading sessions the number of stocks traded closer to their 52-week lows has been bigger than the number of the stocks traded closer to their 52-week highs on the NYSE Composite index (see the chart below). The difference is not big, yet the fact that we have more bearish stocks over the past 4 consecutive trading days is interesting, especially it becomes more interesting when we take into account that NYSE composite index is traded only 1% from the highest close recorded on 5/21/2015. Let's check some of the most recent NYSE Composite index (^NYA) statistics when the number of bearish stocks (stocks traded closer to their 52-week lows) was bigger than the number of bullish stocks (stocks traded closer to their 52-week highs): The last time we had 3 trading sessions in a row of bearish dominance on May 11-13, 2015 when the ^NYA was traded 0.91% from the highest close recorded on April 24, 2015. Then 2 trading sessions in a row on May 6-7, 2015 when the ^NYA was traded 1.40% from the highest close recorded on April 24, 2015. 1 trading session on March 11, 2015 when ^NYA index was 3.43% down from the highest close recorded on March 2, 2015. 1 trading session on January 15, 2015 when ^NYA index was 4.69% down from the highest close recorded on December 29, 2014. 3 trading session in a row on December 12-16, 2014 when ^NYA index was 4.93% down from the highest close recorded on December 5, 2014. Then we had strong correction on October 1-22, 2014, 16 trading sessions in a row when number of bearish stocks was bigger. The next time when we had the number of bearish stocks bigger, goes back to February 4-5, 2014. What we may see from these numbers: Over the past month we have increased number of consecutive trading sessions when the number of bearish stocks overcomes the number of bullish stocks and it happens closer to the highest recorded trading close price. It could be a sign of a coming strong correction. Yet, we have to understand that this statistic does not tell us we will have a correction but it rather says that the current market is in very sensitive condition when a small trigger (negative news or anything else) may start a correctional move down. It may happen tomorrow, it may happen in a month, it may not happen at all. Yet, probability of having it, I would say is high. NYSE Composite Index 50% High-Low Range Chart: chart source: Breadth Chart - NYA - High-Low Range Chart
Even if it looked like a bull on the day this thread started, it has been a bear since then. Who is still thinking it's a bull, and why? If you changed your mind from bull to bear, could you share your reasons? If you were a bear, and are now turning to bull camp, what is your view on the upside?