Brace for Impact

Selling in stocks has been gaining for weeks now. Our ratio has been declining rapidly. We’ve seen periods like this before.
Below is a snapshot of our ratio of buying and selling in stocks. As you can see, the ratio has been falling in a straight line. What we want to highlight is the fact that the ratio falls as selling picks up and buying dries up. So, what’s next?

A critical level was reached this morning, that we’ve written about before, 45.6%. You can read the prior post here. Basically, when selling picks up and we fall below this level, we usually see a decent pullback in the market. Below you can see the prior times we’ve breached this level and what tends to happen afterwards.

Bottom line: we should see a ~5% pullback in the coming days/weeks. Look for the opportunity. For us, we’ll be getting our buy list ready.