Someone did a little expiriment with the QQQQ during a bear market. The sample period was only the down-legs of the market and not the entire bear market including rallies. And guess hat his findings where? Most downlegs had 40-45% up days in them, so even though the market was in a clear downtrend, over a 2-week period there would only be a couple more down days than up days and this only in legs down, not including bounces and bear market rallies. So the perception if you watch the trees instead of the forest, may be scewed.
Here's an example, this chart is a weekly chart of the last 3 weeks, the average gain over that period was 1.09%. It may feel like the market is rallying strongly, but over the weeks it gained little more than 1% at the time I took this measurement today? Not so impressive is it.
Here's our next experiment. There's no doubt that a market that rises on rising volume is the most bullish of price volume relationships and a rising market on falling volume is the most bearish of price volume relationships. So I made this indicator using TeleCharts's Custom Indicator Feature and the line goes up +1 for PU/VU and down -1 for PU/VD. Look at the daily chart below, does it tell you anything about this rally?
Not only has the indicator gone negative, it's hitting new lows in an extreme negative divergence. The first signs of trouble here were around late October.
Sometimes you need to step back to see where you really are.
*If you decide to try out TeleChart or StockFinder I'd appreciate you using my links as I'm an affiliate and long time user of both. It wont cost you a penny more. Then email me and I'll share a ton of my custom indicators with you.
