The Ulcer Index (UI) measures downside risk by tracking how deeply and how long price trades below recent highs. Unlike traditional volatility indicators that measure both upward and downward movement, the Ulcer Index focuses specifically on drawdowns, making it useful for identifying periods when selling pressure is intensifying.

In this chart of Sea Limited, the Ulcer Index recently surged as the stock broke below a downward trendline and accelerated lower. This rise in the UI suggests that declines are becoming deeper and more persistent, signaling increasing downside stress in the trend.

At the same time, the Relative Strength Index has fallen into oversold territory, confirming strong bearish momentum. When expanding drawdowns occur alongside weakening momentum, it often reinforces that sellers remain in control until price stabilizes and downside pressure begins to ease.

Until the Ulcer Index begins to flatten or turn lower, the elevated reading suggests downside risk remains elevated.

Thanks,

Wendy