Latest correction - interesting stat from Lowry's

Lowry's on Demand is one of the oldest technical market research firms in the country, and they occasionally copy me on some of their research. Last week, Lowry's published a piece on the percentage of stocks trading above or below below their 10-day moving average, which had peaked in Feb '07 at 84.6%, and then - after the February 27th correction - fell to 3.77% on March 5th. In other words, at the peak in February, 84.6% of Lowry's stocks were trading above their 10-day moving average, but by March 5th, that percentage had fallen to 3.77%.

What was more interesting was to see the market action following such extremes when the 10-day moving average had fallen below 10% (all of this according to Lowry's research):

1.) In 78% of the cases datng back to 1990, the DJIA change two weeks later was +2.98%

2.) In 94% of the cases (18 in total) the DJIA had increased 8.9% within the following three months;

3.) In 94% of the cases the DJIA was up an average of 20.1% in the following twelve months;

Lowry's was the firm that made the call on March 12th, 2003 that we the major averages had likely put in a "significant bottom" in that month, and they made the right call. My only caveat with the above work is that the DJIA is not really "the market" although the Dow is representative of market action.

I thought it was interesting analysis therefore it is being passed on to readers and clients.

Long DIA and most major index ETF's