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Clearly, from simply following how the indicators changed status from low levels as the S&P 500 traded up and down in swings of 20% at a time, we see that a market bottom truly is a process rather than an event. In 2002, much like 1998, the market made a low, re-tested that low, and traded in a very wide range in between. Remember that the NYSE bullish percent is a risk barometer, when it reaches 30% it suggests to us that those willing and able to sell stocks have largely already done so. It isn't a light switch or something that is particularly great at timing moves in and out of the S&P 500. It doesn't mean that the market can't go lower, but it does mean that the availability of new supply has become limited. We are at that point now, an observation confirmed by the NYSE High-Low Index also having hit 10%. While a reversal into X's from the NYSE High- Low would be an indication that new money can be committed back to equities, also remember that this is an art form, rather than a science and nothing is easy about a market bottom.

Market Observations: PT Chart in X's Hits 0

The PT Chart in X's indicator is a measure of the percent of sector Positive Trend (PT) charts which are currently in a column of X's. When we break this indicator down, we are essentially looking at how many sectors are seeing more stocks violate their bearish resistance lines and are on I-95 North. Since there are 40 different DWA sectors, this indicator moves between 0 and 40. We started keeping it in 2000 so it is not that old compared to other indicators like the NYSE Bullish Percent which dates back to 1955. Despite the brief history as an indicator, it has been a good picture to watch and show us how longer term trends are changing in the market. A look a this chart below and you'll see that after reaching 36 in April, this indicator reversed down into O's suggesting that three sector PT charts had reversed down into O's. This was yet another indicator to suggest high risk in the market. With Thursday's market action, the lone sector PT chart remaining in X's, Software [PTSOFT] reversed down into O's. This takes the chart down to 0 for the first time in its history. This indicator is yet another way of looking at the relative oversold condition of the market. What it has yet to indicate is that the knife has stopped falling. Like the other indicators, we will now watch for a reversal up to tell us that any rally is likely to have "legs."


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