There is no sign of panic selling activity, despite the stock market’s biggest drop off in seven weeks, according to the Arms Index that tracks market internals. The Arms is a volume-weighted breadth measure that tends to rise above 1.000 during market declines and fell below 1.000 during rallies. Many Arms followers believe readings above 2.000 depict panic selling behavior, as investors dump weaker stocks. But although the Dow Jones Industrial Average DJIA, -2.82% is down 595 points, or 1.7% and the S&P 500 SPX, -2.77% is down 1.8%, the biggest declines since March 7, and the Nasdaq Composite COMP, -2.55% is down 1.6%, the NYSE Arms is up to just 1.237 and the Nasdaq Arms is at 1.085. Declining stocks outnumbered advancers by 5.3 to 1 on the NYSE and by 3.3 to 1 on the Nasdaq, while volume of declining stocks outnumbered advancing volume by 6.6 to 1 on the Big Board and by 3.6 to 1 on the Nasdaq.
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