One agency to define a tendency is a catamenia inwards which to a greater extent than stocks are making novel highs than novel lows. I've taken novel 20-day highs in addition to lows across the NYSE, NASDAQ, in addition to ASE going dorsum to 2002 in addition to created a cumulative draw of piece of employment from the data. When the (pink) draw of piece of employment is rising, nosotros produce got a catamenia inwards which novel 20-day highs are outnumbering novel 20-day lows. When the draw of piece of employment is falling, novel lows are dominating.
At times of transition, nosotros run into a handoff betwixt novel highs in addition to lows. When the marketplace made a momentum depression inwards Oct of 2002 (top chart), the cumulative novel high/low draw of piece of employment every bit good made a low. This was followed past times a important rally inwards which novel highs meaningfully outnumbered novel lows. When stocks retested their lows inwards March of 2003, the cumulative novel high/low draw of piece of employment did non confirm.
The contrary was the illustration at the 2007 marketplace top. We saw novel 20-day highs consistently outnumber novel lows into the momentum peak at mid yr (middle chart), in addition to then a topping in addition to meaningful pullback of cumulative novel highs/lows, followed past times toll highs inwards Oct that were non confirmed past times the cumulative high/low line.
As nosotros scrap to stand upwardly for recent lows inwards the S&P 500 Index (bottom chart, bluish line), the cumulative novel high/low draw of piece of employment continues to march to novel lows. So far, nosotros run into no non-confirmations on the lodge of the ii tendency reversals illustrated above.
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