When Big Money unloads his long positions, because he believes Market is about to enter or has already entered a bear period, there are certain things that happens. For example, you see indices are down only 0.5% or 0.6%, but 20 or 30 stocks are fire sold, i.e. sold with a significant price drop at an extremely high volume. Number of new highs basically grinds down to less than 10 while number of new lows shoots up to levels 2 or 3 times higher than the previous day.
Today, even though indices were down as much as 2%, there were only 3 stocks that were being fire sold. Number of new lows for NYSE actually dropped. Volume was higher than yesterday, but by no means today can be characterized as a heavy volume day.
What is really happening is that Big Money is not liquidating his long positions, but he is trying hard to force everyone else to do so. To me that means we are close to a bottom for the current round of correction. Indices will soon start rallying back to the trend.
Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation. Furthermore, the opinions expressed may change without notice.