Large one day crash on both sides of the pond

Troy Bombardia
2020-10-29
Yesterday's large one day drop in global equities pushed many stocks below their lower Bollinger Bands.

Yesterday's large one day drop in global equities pushed many stocks below their lower Bollinger Bands. More than 45% of the S&P 500's members jumped below their lower BB:

The last time this happened was at the start of the February/March crash. Of course, that was not effective short term BUY signal as stocks crashed at the fastest rate in over a decade. But overall, this consistently led to gains for the S&P over the next 6 months.

Things are not quite as extreme in tech stocks. A third of the NASDAQ 100 fell below its lower Bollinger Band:

Once again, this mostly led to bullish outcomes over the next 3 months:

In Europe, a record-nearing 80% of DAX members fell below their Bollinger Bands:

This was a somewhat more bullish-than-random factor for DAX over the next 3 months:

Looking at breadth from a different way, the % of DAX members in a long term uptrend (above 200 dma) plunged from 90% to 50% over the past 2 months:

Historical cases mostly led to gains for the DAX over the next 2 months:

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