Jeff deGraaf Looks at the Percentage of S&P500 Stocks making 20-day Lows

All-Star Technician Jeff deGraff looks at the amount of S&P500 stocks making new 20-day lows as a sign of a near term bottom. Oversold indicators like this one work best within the context of an uptrend. We want to keep in mind that different indicators work better in different market environments. The ability to adapt, and recognize what type of market we're in is very important when putting together a game plan.

According to a proprietary measure he uses at his firm Renaissance Macro Research, the bull market is very much in tact. deGraaf says the ‘tell’ is the number of stocks in the S&P 500 that are making 20-day lows. “When that number spikes over 50% you’re usually very close to an interim low.” And deGraaf says 50% of the S&P made 20-day lows earlier in the week. “That to me is pretty good news,” he says. That’s not to say the selling is over and done. deGraaf concedes the S&P could still pullback as much as 2%. But he feels confident that the market is slowing down not melting down.

”Within the context of the trend, signs are bullish. And I want to be a buyer of weakness,”

Jeff deGraaf is the founder and Chairman of Renaissance Macro Research LLC, an independent macro research boutique firm based in New York. Jeff has become one of Wall Street's most influential macro-based analysts over the last decade, ranked by Institutional Investor magazine for the last 10 years, and ranked as the #1 technical analyst over the last six years.

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