Typically when the sentiment swings too far in one direction, a recoil is needed back in the other direction. These inflections can be identified by extremes in the new highs and new lows as per the NYHL. When a rally is in full gear speeding higher, the new highs are far outnumbering the new lows and the NYHL prints higher numbers. After this euphoric blow-off top in buyer enthusiasm, the downside comes, just as the fun party results in an aching headache and queasy body the next morning; as Kris and Johnny sing Sunday Morning Coming Down.
Conversely, after blood and carnage on Wall Street, when the baby is thrown out with the bath water, a big rally will occur after the washout like the March bottom. The green circles show stock market bottoms and the red circles show stock market tops. What do you think will happen? It's going to be fun to watch. In a couple weeks, the bulls will be singing with Kris and Johnny opining about what was and asking what happened? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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