No. of Recommendations: 22
The 'Extremely Simple Bottom Detector' (ESBD) fired a Minor Bottom on the 3rd April in-line with the latest carnage as [%NYSE new highs]-[%NYSE new lows] were -17.41% of traded issues. While the ESBD has received some adjustment (in private by me) over the last year, a Minor Bottom would also have been detected by the previously public -16.67%/-33.33% version.
The updated / current version sets a Minor Bottom at the 'mean - 2SD' of the '[%NYSE new highs]-[%NYSE new lows]' expressed as a percentage of issues traded. A Major Bottom is set at 'mean - 4SD' & if required an Extreme Bottom (which really only occur during Bear Markets) is set at 'mean - 8SD'. In all cases the mean & SD are calculated since 20051027 (as that is how far back my detailed data series extends). The use of a Gaussian / Normal distribution is a simplification - typically the stock market has 'fatter' tails than the equivalent Normal distribution which will lead to a greater number of minor, major (& even extreme at 8 standard deviation) bottoms during times of stress. This will exhibit itself in more frequent fires of the detector and so is something I can probably live with.
The prior version used [%NYSE new highs] - [%NYSE new lows] < -16.67% = Minor Bottom & [%NYSE new highs] - [%NYSE new lows] < -33.33% = Major Bottom where -16.67% is basically 1/6 more of the NYSE issues traded achieved new lows than highs for a Minor Bottom & -33.33% is of course a 1/3 more new lows than highs (of total NYSE issues traded as obtained from the WSJ Market Data resource). In practice this means a Major Bottom is signaled when a little more than 1/3 of the NYSE issues traded are achieving new lows. This version had the downside of often failing to signal during corrections where panic didn't 'set-in' & so - in good times - went years without signalling a bottom. As a result the current version - with an Extreme Bottom added - is an attempt to add more texture to firing where it both fires more frequent 'Minor Bottoms' in corrections while firing relatively few 'Extreme Bottoms' in full-fat Bear Markets (9 'Extreme Bottoms' total in spread across 3 corrections or bears - late-2008, 2011 & 2020).
Historical chart is here:
https://ibb.co/4RvdkMhY (this is up to the end of last week - will include another 'Minor Bottom' when updated).
Platy
