One of the indicators we track is Down Pressure.  It’s currently flirting with its most extreme levels of the past decade.

The indicator looks at the component stocks of the S&P 500 and computes how many points gained/lost were lost, and also how much of the volume flowing into up/down issues went into down issues.

Over the past 10 days, the average of those two figures is 73%, meaning about 73% of the points gained or lost in the component stocks were lost, and about 73% of the volume flowed into issues down on the day.

There have been four other days that match or exceed this reading – 7/22/02, 10/9/08, 7/2/10 and 8/4/11.  They were each within days of vicious market bounces.

Images: Flickr (licence attribution)

About The Author

Sundial Capital Research, Inc. is a company dedicated to the research and practical application of mass psychology to the financial markets.  Sundial publishes the sentimenTrader.com website.

The work of Sundial Capital Research has been mentioned in publications such as Barron’s, CNN, CNBC, SFO Magazine, The Economist, Reuters, The Wall Street Journal, Active Trader, Futures, TheStreet.com, TradingMarkets, and many others.

Sundial Capital Research founder Jason Goepfert won the 2004 Charles Dow Award for excellence in technical analysis from the Market Technicians Association.  SentimenTrader.com won the award for Most Useful Website for Traders in 2008 from SpikeTrade.com.