Monday, July 20, 2015

A Theory of Narrowing Breadth

Worth revisiting my theory of narrowing breadth, since breadth is getting very narrow indeed:
"Narrowing breadth is a mania concentrated in fewer and fewer speculative vehicles. It's created by momentum investors with stop loss rules who consolidate into their winning positions."
The new NASDAQ high came from... Google. And - to a lesser extent - Facebook. Meanwhile, new highs minus new lows aren't confirming.
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5 comments:

  1. JamesJuly 21, 2015 at 5:56 PM

    Agree that it feels like the start of a drawdown. During the latest Greek negotiations, I assumed the crisis would blow over and any eventual correction would come from some other economic problem that people weren't watching. Maybe I was wrong and it will come from nothing more than weakening technicals.

    Anecdotally there seems to be a lot of complacency and "why short anything?" sentiment.

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  2. bjdubbsJuly 23, 2015 at 10:30 AM

    money well spent re narrowing tops

    http://www.lowryresearch.com/special_reports.cfm

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  3. AnonymousJuly 25, 2015 at 9:43 PM

    May not be a good time to short after all:

    https://twitter.com/ukarlewitz/status/625070979090399234

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  4. CPJuly 26, 2015 at 12:39 PM

    Have you read any of those Lowry Research pieces?

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  5. AnonymousJuly 26, 2015 at 11:26 PM

    No, I'm not familiar with their work.

    ReplyDelete