Club Members - A 1 Percent True Selling Day

One of the rules that I use for calling trend reversal is Gary Smith's 1 percent true selling day.

What do I mean?

According to Smith, "A 1 percent true selling day occurs after a period of rising prices of at least two weeks in which the Dow, S&P, Nasdaq 100, and Russell 2000 indexes all close down 1 percent or more on the same trading day. These types of days often are trend busters and can be harbingers of serious price declines ahead. I use a little leeway, however, in defining such selling days. For instance, if three of the four indexes are sharply lower--say, down 1.5 percent to 2 percent or more--but one is down only .75 percent to 1 percent, then I interpret that as a true selling day. However, my limit is .75 percent." Gary Smith, How I Trade for a Living, pages 112-113.

My personal style is to look for any three indexes to be down more than 1% on the same day.

As I type, the Nasdaq is down 1.20%, the NYSE is down 1.00%, and the Russell 2000 is down 1.76%. And it is a Friday.
I'm calling today a 1 percent true selling day.

Bad news is sold in a Bear Market.

Later.

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