Selling pressure was extremely broad in Friday with all sectors declining and more than ninety percent of stocks in the S&P 500, S&P MidCap 400 and S&P SmallCap 600 declining. While this kind of broad selling pressure creates a short-term oversold condition, it also reflects a change in market dynamics and points to a corrective period ahead.
A 90% down day occurs when 90% of all stocks in a particular index decline. Chartists can measure this indicator using the Advance-Decline Percent indicators at StockCharts. A reading below -80% means more than 90% of stocks in the index declined on the day. Here is an example calculation for the S&P 500 on Friday:
- S&P 500 Advancing Stocks: +30 (+6%)
- S&P 500 Declining Stocks: -470 (-94%)
- S&P 500 Net Advances: -440 (-88%)
Thus, we have S&P 500 AD Percent ($SPXADP) at -88%, S&P MidCap 400 AD Percent ($MIDADP) at -89% and S&P SmallCap 600 AD Percent ($SMLADP) at -87%. The decline affected large-caps, mid-caps and small-caps in pretty much equal measure.