By kind permission of Elder.com, the website of the recognized trader, Alexander Elder, I reproduce for you, literally, its article "Books and Trades #254: A major Buy signal on stand-by" of November 27th, about the actual behavior of the market and its incredible behavior in the Christmas week.
December 27, 2018
Dear Trader,
In my experience, the New High – New Low Index is the best leading indicator of the stock market. It works by tracking market leaders: the New Highs are the leaders of strength, New Lows of weakness. I track this indicator on both weekly and daily charts, in four look-back time windows. We post nightly updates of this indicator at SpikeTrade.com
My research during the past decade shows that the strongest signal of NHNL is a Spike – it occurs when the weekly NHNL drops below the minus 4,000 level and then rallies about it, showing that the decline has become exhausted. Let’s take a look:
This chart, updated on December 26 of this year, shows the weekly NHNL well below -4,000. It may rise above that line very soon, giving us its buy signal. Those signals always occur when the market looks most scary. The big question is: will that signal be of the 2008 type (a strong countertrend rally) or of the 2009 and 2016 type (the start of a multi-year bull market). That is the question currently discussed in SpikeTrade.
I’d like to share with you this one-minute video, a holiday greeting, from SpikeTrade.com