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Cumulative New Extremes

When stocks make new extremes it encourages other stocks to make similar extremes. Enough new extremes can cause a cascade of stocks.

Abstract Root Concept:
When the component stocks of an index are making new extremes the index moves in the direction of the new extremes. Component stocks making extremes is a precursor to index price moves.

Example 1) Index price ( SPY ) follows Components Stock ( NYSE ) extremes.

In example 1 extremes from NYSE component stocks were a major influence in the price changes of the SPY.
Any entry system attempting to pick turning points will benefit from waiting for new extremes supporting the trade.


Example 2) Large cluster of new extremes create strong pivots.2018-01-23_22-09-12.png

In example 2 when an Index ETF (SPY) moves due to a large group of extremes from component stocks (NYSE) the respective price at it’s strongest point is often becomes a strong support/resistance level.