The 2008-2009 waterfall decline badly damaged the market’s internals. The size of the damage is illustrated by the NetHL%(E) indicator. The damage took five months to repair.
The 2010 "flash crash" has yet to match the internal damage, but the jury is still out. If the internal damage does not worsen, it will take less time to repair. I will be watching NYSE and OTC breadth indicators for positive divergences in the coming weeks.
NYSE Internals:
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