SEE ALSO --> | Profiting from Advance/Decline Ratios | Buying Demand & Selling Pressure |
                      | Pinpointing major/minor JSE bottoms with PowerStocks TroughFinder |
                      | 12-year historical archives of Lowry's 90% and 80% Days |

Market Breadth Indicators measure the overall health, status and trends of an Index or market (such as the JSE ALSH) by looking at price and volume action of all its underlying shares as opposed to those of the Index itself. Breadth indicators are exceptionally powerful at predicting weakening or strengthening markets in advance and are also exceptionally accurate in predicting bull market tops and bear market bottoms as well as localised peaks and troughs.

It is incredible that all the investment greats and top-flight US research firms use this data but there are no software packages or other web sites that publish this information for the JSE. Even more startling is how few local professional fund managers and pension funds put this type of data to good use. By placing these powerful tools in the hands of the private investor we allow you to compete with the best.

We have already exposed you to the power of our first Market Breadth Indicator, namely the Advance/Decline line (See Profiting from Advance/Decline ratios) which plots the number of shares daily that advance in price versus those that decline in price. We showed how divergence of this indicator from the ALSH index was a typical warning of impending bear markets. We then went on to use this data in the incredibly powerful McClellan Oscillator and Summation Indices to indicate market strength and direction and perform reliable short term market timing.

In this research note, we show how including volume together with the individual daily share price moves creates even more powerful breadth indicators and peak/trough detection capability. We also show how 15-20 "special events" associated with volume occur each year on the JSE that offer high probability of profitable trades when acted upon by our subscribers.


After extensive research, and revamping of our data feeds and databases, we are incredibly proud to introduce an even more potent market breadth indicator, namely that of Up-Volume and Down-Volume. Volume trends are even more important than price trends when measuring overall market demand and supply in order to forecast trends.

Up-Volume is the sum of all volume traded of shares that advanced for the day, and Down-Volume is the sum of all volume traded of shares that declined for the day. Up-volume is an important manifestation of DEMAND and Down-volume represents SUPPLY (or selling pressure). As with Advance/Decline Price data we track the following indicators for our subscribers:

1. UP/DN VOL = Ratio of Up-Volume to Down Volume
2. DN/UP VOL = Ratio of Down-Volume to Up-Volume
3. Lowry's 90-90 Special Events for profitable trading
4. Buying  Demand Trend = average rolling 5-day Up-Volume
5. Selling Pressure Trend = average rolling 5-day Down Volume

The above 5 pieces of data are incredibly powerful for depicting bear market bottoms, key reversal points, the start of bull markets and of course an indication of the overall health of the stock market. They are so incredibly powerful that you could even institute a very profitable short term trading program around them based on our "special event" alerts. All the above data is published for our paid subscribers in The Weekly JSE Pulse (WJP). Occasionally they trigger SPECIAL EVENTS (as we track them daily) in which case our subscribers are immediately alerted to the warning or opportunity presented by the event.

The rest of this section goes on to cover items 1-3 in detail whilst the research note titled "Buying Demand and Selling Pressure" covers items 4 and 5.


Lowry's Research Corporation, one of the oldest technical analysis research firms on Wall Street, first popularised 90% Upside and 90% Downside Volume days in their seminal research paper titled "Identifying Bear Market Bottoms and New Bull Markets" in February 2002. After extensive research on the US markets, going back 69 years to 1933, they asserted that new bull markets were preceded by bear markets and that bear market bottoms were characterised by multiple "90-90 down days" where 90% of price moves were share price declines and where 90% of Volume was down-volume. These were panic and/or final capitulation sell-off's characteristic of deep troughs.

They also asserted that new bull markets were born from one to three "90-90 up days" following several "90-90 down days" that marked the bottom of the bear market. This was as fear of the market was overcome by greed of missing out on good bargains and buyers would rush in their droves to snap up discarded stocks. The findings were widely hailed as break-through research and Lowry's now derives much of their income from advisories to institutional investors using these ratios and proprietary derivatives thereof.

The 90% Days theory is not new, untried or a back-record discovery. The original research was conducted by Lowry's staff 34 years ago in early 1975. The findings were first reported to the investment community in 1982 at a Market Technicians Conference. Since that time, 90% days has been recorded on US markets day by day and has proven repeatedly  to be a highly valuable tool in identifying the extremes of human psychology that occur at major market bottoms.

We will go on to test this theory on the JSE (we never assume anything that works in the U.S works on the JSE) by examining it against all the major crashes/corrections exceeding 20%. We will also show how these indicators work exceptionally well for the many minor (sub 20%) corrections that happen in the life of a bull market (we have had 3 already since the trough on 21st November).


We tested the above Lowry's "90% Volume Days" theory with our new database and confirmed the theory spectacularly in the last "Great Crash of 2008". Below is a chart of the JSE from the 20th May 2008 peak together with daily Up-Volume to Down-Volume ratios (green bars) and daily Down-Volume to Up-Volume ratios (red bars). The yellow horizontal line depicts the magic 9:1 golden ratio representing the 90% threshold.

We see that although the JSE fell terribly from 20 May 2008 to the trough of 21st November (many people say the 3rd March 2009 was the trough, but we maintain it was 20th November 2008.) the major selling only happened near the bottom. Note how as we progressed further into the crash, the intensity of bouts of selling got worse and worse (increasing length of red bars) until they reached panic proportions of days of 90% of volume being down volume, marked by the red arrows.

Along the way down, there were many "sucker rallies" depicted by 5:1 or more but less than 9:1 Up-volume days (green vertical bars), but the astute investor would have avoided these traps by ignoring those up-volume days that never convincingly exceeded the 9:1 threshold.

After 5 bouts of broad based panic selling, culminating in an incredible 27:1 day on 6th Oct 2008 where 96.43% of all volume traded on the JSE was down-volume, the buyers were still not rushing in with conviction. There was one more final sell-off of 13:1 on 22nd October and then the buyers rushed in to snap up bargains of a lifetime on 29th October 2008 with incredibly powerful back-to-back Up-volume days of 18:1 and 14:1 respectively.

According to the Lowry's theory, this is where we would have called the market reversal, but as you can see there was one last-ditch 18:1 sell-off on 11th November followed by buyers rushing in again on 21st November on a 10:1 up-volume day to snap up even better bargains than those on offer from the 29th October. The huge up-volume days recorded on 29th Oct and 21st November, according to Martin Zweig paraphrase "served to launch the market with sufficient momentum to allow it to escape earth's orbit" (read as : "enough force to propel the market into a bull phase".) Zweig was adamant that powerful, broad based demand surges were required to launch convincing new bull markets and this ties up with the Lowry's research.

Whether we would have used this information to start climbing back in the market on the 29th October Lowrys signal when the ALSH was 19,795 or the 21st November signal when the ALSH was 18,064 is academic since in both cases you would have done REMARKABLY WELL at picking the bottom and no doubt would have many friends around the fireplace staring at disbelief at your story (and subsequent good fortune!)


We are busy cataloging data for this phenomenon for all >20% corrections going back to 1997, however we thought we would share the findings from the previous 3 corrections before the major 2008 crash.

One minor correction of 8%, one major correction of 13% and one crash of 20% appears above. This gives us a good mix of scenarios to compare findings to together with the analysis we did of the Great Crash of 2008 (-48%).  The first thing we note is that all market falls were accompanied by panic selling toward the end of greater than 15:1 down-volume days.

The smaller correction reversal point was only accompanied by 5 and 6 to 1 up-volume days (80% and 86% up-volume days) but the bottom was marked by two such events (signals 1 and 2) close together which is also a notable event according to Lowry's Research. For smaller corrections we can expect the intensity of the rebounds to be smaller than that of major crashes.

The middle correction, being somewhat larger, generated the classic Lowry's symptoms of increasing panic and at least one greater than 15:1 downside day and multiple 9:1 days (90% days) in succession. Whilst signal 3 may have marked a premature bottom, signal 4 provided an excellent bottom placement based on an 80% up day following large down days. As with the 2008 crash though, both signals were generated very close to the bottom. Just observe after signal 4 how the buyers took charge with multiple consecutive 4:1 (80%) and 5:1 (83%) up-volume days to propel the market into a new bull trend.

Signal 5 is not a crash signal but a "booster" of a very powerful 17:1 (94%) up-volume day following a 4.5:1 (82%) down-volume day. We would have generated a special event on this occasion and as you can see this would have allowed you to pick up nicely in that localised trough and enjoy gains halfway through the bull market trend.

Signal 6 : Despite its 12:1 size, signal 6 was not a good signal since it was not preceded by a large enough down day. Acting on 80% or more up-volume days without the presence of a Advance/Decline ratio of 3:1 or more (more on this later) or a previously large enough down-volume day leads to "less desirable results" according to Lowry's and this is confirmed with signal 6. Signal 6 was a typical peak "blow off" event as our other indicators (such as the A/D Line) were already signalling a weak market and a peak at this stage.

Signal 7 is a classic Lowry's 90% down-day followed by 90% up-day event. This would have been an easy reversal to call since up-volume days of 16:1 or more (95% or more) following down days of 15:1 or more are rather powerful. You will note we observed a maximum up-volume day of 18:1 in the great 2008 crash.


Martin Zweig, in our mind the greatest modern technical investor in our time (he has now retired with his hundreds of millions) was an avid follower of these ratios, more specifically the UP-Volume to Down-Volume ratio or UP/DN ratio. (the DN/UP ratio is merely the inverse, but we track both due to the visual cues they provide). Besides their demonstrated capability for picking out bear market bottoms and starts of major market reversals, Zweig used them for intermediate trough detection post market-reversal as well. We follow this approach but using 80% (4:1 ratio) as a threshold as opposed to 90% (9:1 ratio)

The charts below show you these ratios as we publish in The Weekly JSE Pulse for our paid subscribers and how we used the ratio to alert our subscribers to a local reversal after the last big consolidation from 2nd June 2009 to 6th July when the JSE pulled back 1,996 points or 8.44%

We issued three separate alerts that would have done you quite nicely. The 1st alert was after the 7.68:1 (88% Up-Volume day) event on 1st July 2009 (the 2nd tallest green bar on the left chart.) This followed a 5:1 (83% Down-volume day) event on 17th June (2nd tallest bar on right chart). We never issued an alert for the first event on 17th June event as we waited for it to be confirmed by the appropriate up-volume day. As you can see, this alert would have allowed you to action a trade the following day, on the 2nd July, an amazing 3 days before the trough on 6th July!


The 2nd alert was issued on evening of 6th July, the day of the trough marked by the green arrow on the chart on the right (above or below). Downside volume registered a very rare 8.85:1 (89.85%, good enough for a classic Lowry 90% down-volume-day signal). We issued a BUY signal on this day without waiting for a 80% up-volume day confirmation since on this day we also registered a rare declines outnumbering advances 3-to-1 (75% of moves on the JSE were down-moves as shown in the chart below). These "double intensity events" of extreme price action coupled with extreme demand/supply conditions are very powerful, as used by Lowry's Research in their paper. For illustration purposes we show the Advance/Decline data we track and publish for our paid subscribers on WJP below:

This is what we term a "75-90 Down DoubleDay" when declines outnumbered advances 3:1 (green arrow on chart on right above) AND down volume outnumbered up-volume 9:1 (green arrow on chart on right in previous section.) If you placed your trade the following day you would have missed the absolute local trough by an amazing 1 day!

These events are reasonably rare and we issue DoubleDay alerts for up days and down days. A DoubleDay is referenced by "xx-yy Down/Up DoubleDay" where xx is an advance-to-decline (if its an Up day) or decline-to-advance (if its a down day) % ratio and yy is a % up-volume (if its an up-day) or % down volume (if its a down day).

The threshold for xx is 75% (3:1 or more) and the threshold for yy is 80% (4:1 or more). So an "80-90 Up DoubleDay" is a bullish signal following an intense buying day when advancing shares outnumbered declining shares 4-to-1 (or 80% of share moves were advances) and where up-volume exceeded down-volume 9:1 (90% of volume traded was related to advancing shares). A 90-90 Up DoubleDay (or higher) is an exceptionally powerful surge in the market, enough to launch a short term run on the JSE and a signal for you to get into the trend.

You can assume in general that the higher the ratios you see for xx and yy the more powerful the signal or meaning of the event.


Your most powerful DoubleDay signal is a 90-90 Up DoubleDay that follows shortly after a 90-90 Down DoubleDay, or that follows shortly after a 90% down-volume day. These are confirmations marking key reversal points in the markets.  In general, combination days of special "Up" events that follow shortly after special "Down" events mark high probability short to medium term market reversals or bullish surges.

This is demonstrated by the 3rd alert we generated for our subscribers on 14th July, 6 days after the local trough when we had previously generated a "75-90 Down DoubleDay". On the evening of 14th July we saw that Advances had exceeded declines by the rare 3:1 threshold (75% of moves were on the upside depicted by green arrow on above chart on left ). This on its own was already a bullish COMBO signal since it followed merely 6 days after the 75-90 Down DoubleDay (itself a powerful signal). Also, this event itself spawned another special event as it had raised the 5-day rolling average of advances to declines to 1.8 - a metric favoured by Zweig himself as very rare and powerful.) But then we saw that up-volume had exceeded down volume by an incredible 12:1 (green arrow on the left chart two sections back). So on the 14th we also had a 75:92 Up DoubleDay. What we were looking at was a Up-DoubleDay that followed 6 days after a Down-DoubleDay - an exceptionally bullish signal.

Of course, the following day, the 15th, we saw another 3:1 Advances:Declines ( a rare back-to-back event) and a 5.7-to-1 up-volume day to give us a 75-85 DoubleDay signal. So we had an even more rare back-to-back DoubleDay Combo signal! There were BUY signals everywhere and we climbed into TOPSKA geared warrants on the TOP40 on the 15th July and rode the market up 1,706 points (7.24%) for a total 120% profit on the trade (some of us exited after 75% gains).

Although we actioned our BUY signal with TOPI Warrants, a more conservative investor in the previous example could have banked 7-10% gains within 30 trading days, by investing in a SATRIX ETF, yielding a compound gain in excess of 100% per annum without leverage!


Volume based market breadth data is an exceptionally powerful tool especially when used in combination with Advance/Decline data to pick out DoubleDay signals and combos. The Volume ratios are useful for picking out bottoms of major corrections but as we have demonstrated, they can also serve as powerful short term indicators which you can capitalise on for sharp, low risk gains. The larger the correction the larger the thresholds you use to mark turning points.

The signals we generate from Advance/Decline and Down-Volume/Up-Volume data won't catch every trough, but you can be assured that when they fire you have high-probability events you could trade relatively risk free upon. As shown by Lowry's Research, the signals are more useful for picking bottoms/troughs and key reversal points but are less useful in assisting you with the SELL signals. For that we need to use other breadth metrics such as the Percentage 52-Week High Indicator (to be launched shortly), Percentage Bullish Index and our own exceptionally powerful propriatary RSI Breadth Indicator (to be launched next month for our paid subscribers.).

For the enthusiasts we highly recommend you take the time to read Lowry's Research Corporations 17-page paper titled "Identifying Bear Market Bottoms and New Bull Markets" We can't provide it on this site for you to download as it is copyrighted but the link above takes you to various places on the internet that seemed to have gained the appropriate permission to offer it for download.

PowerStocks Research paid subscribers can get access to weekly updated Volume data at WJP. When we are going through a major correction, the data will be published daily.

READ THIS NEXT --> | Using Volume to measure Buying Demand & Selling Pressure |
                               | Profiting on Breadth data with PowerStocks TroughFinder |
                                  | 12-year historical archives of Lowry's 90% and 80% Days |
Make a Free Website with Yola.