So far this year, the S & P 500 is down nearly 14%. When is the good time to buy the bottom of US stocks? Doug Ramsey, chief information officer of Leuthold Group, said that focusing on the high-low logic index (High-Low Logic Index) helps to find the bottom of the market.

It is understood that the high-low logical index is defined as the percentage of stocks that reach a new 52-week high or low relative to all stocks, with the smaller of the two as a reading. The index measures the degree of divergence within the market, with a high level indicating bearish and a low level indicating bullish, because in a normal market, individual stocks tend to converge in performance, and when intra-market divisions increase, it is often a warning sign of a bear market.

"to get a bullish signal for a high or low logical index, we need to see the share of stocks at a 52-week high or a 52-week low, or both, continue to fall to extremely depressed levels," Ramsey said. " "We monitor both 21-day and 10-week versions of the indicators. The latter signals are of low frequency and sometimes do not appear until a few weeks after the final low point is formed. But they have always been very reliable. "

"after a buy signal from the 10-week high and low logic index, the S & P 500 rose an average of 18.8 per cent in 12 months, with a forecast win rate of 16-0," Ramsey said. "

"the buy signal from the recent high and low logic index on the 21st is also very accurate, especially in 2020, when the index predicted that the sell-off would end only nine days after the market bottomed out due to the COVID-19 epidemic," Ramsey said.

The index "is also timely in confirming the market lows of February 2016 and December 2018, and the only really embarrassing buy signal occurred in the middle of the 2000-2002 tech stock crash."

Ramsey said it was too early to find the "main bottom of the stock price", but he would keep a close eye on the high and low logical indices.

10-week editionTrend of high and low logical index

21-day editionHigh and low logical indexTrend