90/10 Day Was 7 Days Ago, and That Means . . .

February 8, 2011 8:15pm by Barry Ritholtz

Last Monday, I discussed the usual play book for 90/90 days (90/90 Down Days Followed by Rally, Then…).

The conclusion was: “based on the work of Paul Desmond of Lowry’s, we typically see a rally that lasts 2 – 7 days.”

Well, today was the 7th day following the January 28th sell off. According to Desmond’s historical work, this low volume rally should be running out of steam shortly. If this market is going to sell off (5-8%), it should start doing so . . . NOW.

The liquidity and constant bid makes it appear that it cannot go down, but eventually, the bulls tire. I am only looking for a shorter term trading top — I am not ready to declare the cyclical bull that began March 2009 over — yet.

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