Info!! Prep: Bottoming Stock Marketplace Or Compass Earlier Eventual Pain?

I've received quite a few questions from traders nigh stocks as well as whether we're putting inwards a bottom here.  The inquiry is understandable.  If you lot hold back at a nautical chart of the NYSE Composite Index ($NYA), for instance, you'll come across that we've bounced off a back upward area.  Too, you lot tin come across from the number of fresh three-month highs minus lows amid all mutual stocks (charted above), that nosotros are at levels consistent amongst pullbacks during the by twelvemonth or so.

What the nautical chart doesn't present is that pullbacks inwards 2012 (early June, mid-November) occurred amongst good over one k issues making three-month lows over three-month highs.  While nosotros did bounce off lows today, that occurred later on novel three-month lows had expanded from their Apr xi levels:  782 vs. 621.  

Perhaps fifty-fifty to a greater extent than interestingly, novel three-month lows (at 782) are getting to a greater extent than or less the degree nosotros saw early on inwards Feb (968), fifty-fifty though SPY is good to a higher house its early on Feb price.

All of this suggests deterioration from my perspective.  Small cap as well as growth-oriented NASDAQ shares are underperforming, contributing to the novel depression heaviness.  In a bottoming market, you'd similar to come across fewer shares participating on the downside, every bit stronger, pro-risk sectors laid out to assume leadership.  So far, that is non happening.  It's the defensive names as well as sectors that are nigh their year's highs.

My models weigh the 2013-2014 sense strongly as well as then accept been bullish lately.  And, yes, nosotros accept gotten some bounce.  I am mindful, however, that nosotros may last breaking recent regimes--hence the closed scout on breadth as well as downside participation.  Those measures advise we're non getting stronger.

Further Reading:  An Earlier Read on Market Strength