3 Indicators Say There Will Be More Pain In Stocks

seekingalpha2022-05-19

monsitj/iStock via Getty ImagesBuy the dip indicatorOur buy-the-dip indicator is simple and reflects the tendency of the market to rebound after losses, as well as the trend strength. One could think ...

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Comments

blessed_1
2022-05-19
blessed_1
ok
FattAgain69
2022-05-19
FattAgain69
First shoe of QT not even dropped yet.
飙高音
2022-05-19
飙高音
K
MengKeng
2022-05-19
MengKeng
buy low and sell high opportunity again haha
dahae
2022-05-19
dahae
A
dahae
2022-05-19
dahae
A

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One could think ...</p>\n\n<a href=\"https://seekingalpha.com/article/4513016-3-indicators-say-there-will-be-more-pain-in-stocks\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>3 Indicators Say There Will Be More Pain In Stocks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n3 Indicators Say There Will Be More Pain In Stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-19 13:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513016-3-indicators-say-there-will-be-more-pain-in-stocks><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>monsitj/iStock via Getty ImagesBuy the dip indicatorOur buy-the-dip indicator is simple and reflects the tendency of the market to rebound after losses, as well as the trend strength. One could think ...</p>\n\n<a href=\"https://seekingalpha.com/article/4513016-3-indicators-say-there-will-be-more-pain-in-stocks\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4581","symbol_name":"高盛持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4513016-3-indicators-say-there-will-be-more-pain-in-stocks","article_id":"2236149447","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2236149447","pubTimestamp":1652938915,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"monsitj/iStock via Getty ImagesBuy the dip indicatorOur buy-the-dip indicator is simple and reflects","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"161125":"标普500","513500":"标普500ETF","BK4581":"高盛持仓","BK4504":"桥水持仓","BK4544":"ARK ETF合集","SH":"标普500反向ETF","SDS":"两倍做空标普500ETF","ARKK":"ARK Innovation ETF","UPRO":"三倍做多标普500ETF","OEF":"标普100指数ETF-iShares","IVV":"标普500指数ETF",".SPX":"S&P 500 Index","BK4534":"瑞士信贷持仓","SSO":"两倍做多标普500ETF","BK4559":"巴菲特持仓","SPXU":"三倍做空标普500ETF","BK4550":"红杉资本持仓","SPY":"标普500ETF","OEX":"标普100"},"translate_title":"3指标称股市将有更多阵痛","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"161125":0.6,"513500":0.6,"ARKK":1,"SPY":1,"ESmain":0.6,"UPRO":0.6,"SSO":0.6,"SPXU":0.6,"SH":0.6,"SDS":0.6,"OEX":0.6,"OEF":0.6,"IVV":0.6,".SPX":0.6},"content_text":"monsitj/iStock via Getty ImagesBuy the dip indicatorOur buy-the-dip indicator is simple and reflects the tendency of the market to rebound after losses, as well as the trend strength. One could think of many such indicators, but this is one we use.Daily SPY Pacer Swan SOS Fund of Funds ETF|ETF Chart with Buy the Dip Indicator (Price Action Lab Blog - Norgate Data)The indicator is the percentage of down days followed by up days in a rolling 252-day period. The indicator in SPDR S&P 500 Trust ETF (SPY) peaked at 70.4% in October 2020, and that was a new all-time high. The Covid-19 stimulus package was the driver of the rally. Since, the indicator has crashed to 53.4%, and it's on a steep downtrend as traders sell the rips rather than buying the dips.Note that this indicator reached a low below 45 around the dot com top, and slowly increased during the bear market as traders and investors were accumulating shares by buying dips. This indicator also fell precipitously during the GFC bear market to about 48. The last two bear market observations imply that either the top is still forming, or it will take a while for a bottom to form. In either case, there is an indication of additional downside. Caveat emptor: the sample of only two past bear markets is small and any conclusions maybe not be significant. However, this is true with all indicators, technical or based on macro, and it's all we have. This is one reason we look at several indicators and try to limit confirmation bias.NASDAQ-100 top Dow-30 Ratio This is an interesting indicator, but with a sample of one. Nevertheless, it may be an important one.Daily chart of the ratio of NASDAQ-100 to Dow-30 (Price Action Lab Blog - Norgate Data)The NASDAQ-100/DOW-30 ratio peaked at 0.42 on February 25, 2000, and near the top of a brutal bear market in tech and growth stocks. The maximum drawdown of NASDAQ-100 (NDX) was about -83% while the Dow-30 fell a maximum of -38% from all-time highs. As a result of the relative outperformance of Dow-30 stocks (DJI), the ratio plunged during the bear market to 0.11 and then started uptrending with recovering tech stocks.On December 1, 2021, the NASDAQ-100/Dow-30 ratio made a new all-time high around 0.47. Soon after the correction in tech stocks started.Note that in mid-May 2000, the ratio rebounded but this was a bull trap. This may be repeated this time. Again, as with the previous indicator, we have a minimum sample size. But besides the sample sizes, we also look at the severity of the indicator signals. A single indicator may not reflect reality, but several of them together may provide good hints. Ultimately, it's the market action that is the best indicator.Tech reversion to the meanFinancial price series are mean-reverting and this is one reason we pay attention to this indicator.Mean reversion is a financial term for the assumption that an asset's price will tend to converge to the average price over time. Source: Wikipedia.Before we start, note that mean-reversion is a loose term and could mean different things to different analysts. Here we look at price mean-reversion based on price linear regression and the one-standard-deviation channel.Daily NASDAQ-100 chart with mean-reversion channel (Price Action Lab Blog - Norgate data)We believe that due to excessive stimulus during the pandemic there was irrational exuberance in the tech market, with the NASDAQ-100 breaking above the one-standard-deviation line away from the mean trend in June 2020. The rally in prices continued due to reflexivity and peaked in December 2021. Afterward, reversion to the mean started and this process of valuation adjustment is still ongoing and will probably continue for a while.The NASDAQ-100 could eventually test the upper one-standard deviation line. The level will depend on the speed of the correction: if the correction is fast, the first support level could be around 10,400 but if it's a slow process, the level could be higher and around 11,000.Then the question is, whether there will be a reversion towards the mean around 7,100. A complete reversion will be devastating and will equate to an additional 44% drop from current levels. No one knows what will happen and a new regime may emerge with a new higher mean. However, the current adjustment process via mean-reversion appears to have the strength and is determined to remove excesses from the market.In an SA article on February 19, 2022, I argued that the ARK Innovation ETF (ARKK) mean-reversion was a leading indicator for NASDAQ-100. Since the article was published, the NASDAQ-100 has fallen about 11%. ARKK has nearly completed a violent mean-reversion process from the top two-standard deviations line to the bottom negative two-standard deviations line.Daily ARKK chart with Linear Regression (Price Action Lab Blog - Norgate Data)In our opinion, there will be a rebound, but it will act like a bull trap. This assessment may change in the future if the facts change.ConclusionOur buy the dip indicator points to a strong downtrend. The NASDAQ-100/Dow-30 ratio indicates there is a normalization process in place, but there may be a rebound as during the dot com bear market. The NASDAQ-100 mean-reversion indicates more downside, but a similar indicator applied to ARKK shows potential for a short-term rebound from these levels. All in all, the three indicators we looked at point to additional pain in the market until the stimulus excesses are removed.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9023422011,"gmtCreate":1652950398033,"gmtModify":1676535195014,"author":{"id":"4112410321254552","authorId":"4112410321254552","name":"blessed_1","avatar":"https://community-static.tradeup.com/news/71622697830d9517eb67a61917d8a95f","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":4,"crmLevelSwitch":1,"idStr":"4112410321254552","authorIdStr":"4112410321254552"},"htmlText":"ok","listText":"ok","text":"ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023422011","repostId":2236149447,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9023467930,"gmtCreate":1652949380520,"gmtModify":1676535194885,"author":{"id":"4107015407846850","authorId":"4107015407846850","name":"FattAgain69","avatar":"https://community-static.tradeup.com/news/a4e3d511c15de9227ee9ebca3021f903","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"4107015407846850","authorIdStr":"4107015407846850"},"htmlText":"First shoe of QT not even dropped yet.","listText":"First shoe of QT not even dropped yet.","text":"First shoe of QT not even dropped yet.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023467930","repostId":2236149447,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9023460091,"gmtCreate":1652948412213,"gmtModify":1676535194584,"author":{"id":"3582709856792743","authorId":"3582709856792743","name":"飙高音","avatar":"https://static.tigerbbs.com/475b76d560816b91289272c06ae8dfff","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3582709856792743","authorIdStr":"3582709856792743"},"htmlText":"K","listText":"K","text":"K","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023460091","repostId":2236149447,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9023434069,"gmtCreate":1652944767251,"gmtModify":1676535194037,"author":{"id":"3582668988155006","authorId":"3582668988155006","name":"MengKeng","avatar":"https://static.tigerbbs.com/daf999525f61ba41d3c13b0ed728eb77","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3582668988155006","authorIdStr":"3582668988155006"},"htmlText":"buy low and sell high opportunity again haha","listText":"buy low and sell high opportunity again haha","text":"buy low and sell high opportunity again haha","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023434069","repostId":2236149447,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9023431995,"gmtCreate":1652943573817,"gmtModify":1676535193852,"author":{"id":"3560092322694803","authorId":"3560092322694803","name":"dahae","avatar":"https://static.tigerbbs.com/137beae1f6048901843924ba46796740","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3560092322694803","authorIdStr":"3560092322694803"},"htmlText":"A","listText":"A","text":"A","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023431995","repostId":2236149447,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9023431051,"gmtCreate":1652943566073,"gmtModify":1676535193844,"author":{"id":"3560092322694803","authorId":"3560092322694803","name":"dahae","avatar":"https://static.tigerbbs.com/137beae1f6048901843924ba46796740","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3560092322694803","authorIdStr":"3560092322694803"},"htmlText":"A","listText":"A","text":"A","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023431051","repostId":2236149447,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":85,"commentSize":12,"repostSize":0,"favoriteSize":3,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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