Market Breadth

Excellent thread isatrader - good work!

Thanks Tim, I appreciate it.

I've updated the bell curve of the major sector bullish percent charts that you can get for free on Stockcharts and I've also attached the 12 individual bullish percent charts so that you can see how they relate on the bell curve.

When I last did the bell curve on the 2nd April here: http://www.trade2win.com/boards/tech...ml#post1822960 it showed a very overbought market with a median distribution of 83.86%; the price action since then has brought the median distribution down to 75% with a number of sectors turning negative or giving bear alerts. The Gold miners have continued to be very weak dropping to extremely oversold levels of just 10.71% of gold miners on P&F buy signals currently.

Risk continues to be very high in the majority of sectors, so caution is needed.

Below is the table and sector bell curve

There was only one change in status to note today (13th April) and that was on the short term NYSE Percent of Stocks Above 50 Day Moving Average ($NYA50R), which is also know as the % Above 10. The status moved to Bear Confirmed after a brief Bull Alert on Wednesday and Thursday. So the table is looking a lot more negative again with the short term indicator on Bear Confirmed status; the medium term indicator on Bear Correction status and the long term indicator on Bear Correction status. The head coach of the team is the NYSE Bullish Percent Index though, which is still currently only on Bear Alert status suggesting that we should have our defensive strategy in play as the market currently has the ball and is attempting to score against us.

Here's the updated table and NYSE Percent of Stocks Above 50 Day Moving Average ($NYA50R) chart:

hey isa..some nice charts there
the plot from what i can see on the last chart is box size 2% by 3 reversal.there is only one data point per day..so it is a close
to make this chart go really ballistic and tell a more important story
1.go down to 1 box reversal
2.start at 1% box size and go up in increments of 0.1%
3.look for trends by drawing a trendline according to 1 box rules
now at some point,you will find a good trend..save that chart settings
then you can base trades accordingly..you will have found the true short term trend,and you will be able to judge trend reversals more accurately
chartcraft display bullish percent as a line chart..what you will be doing is displaying a good idea of the true trend
better still use s&p 500...imho..nyse might have too many small caps
takes a little longer...but you will identify the best trend and be able to establish reversals more quickly.3 box reversals are too clumsy in a volatile market..imho
the charts will be much wider,but who cares.it is the short term trend that you want and then correlate that with the bigger picture

forgot to add
you will see more consolidations..but you will be able to assess the breakouts more clearly
remember..a break of trendline is a possible signal to close positions and not to anticipate a reversal on 1 box

Hi dentist, you are correct that the box size on the Bullish Percent charts is close data with a 2% box size and a 3 box reversal, so that column changes are only made if 6% of stocks move from P&F buy signals to sell signals or vice versa. As the Bullish Percent chart is used to measure risk in the market and not meant to be a market timing tool. I've seen a lot of discussion on Dorsey's P&F message board by the professional money managers who are P&F craftsmen and they always tell people to use it as intended as a gauge of risk in the market.

It was developed by Abe Cohen who founded Investors Intelligence in 1955 and was refined over the years as the data built up by Earl Blumenthal in 1975, and the rules were further refined by Mike Burke in 1982, when he became editor of Investors Intelligence, and remain to this day the recognised method of applying breadth to market strategy.

Attached is the signals from the Investor Intelligence site and the link to the page: Investors Intelligence Global - Breadth Indicators



The alternative measurements of breadth of the percentage of stocks above their 50, 150 and 200 day moving averages can be used for market timing as well as gauging risk. So the 1% percent 1 box reversal method you favour could be used on those. Although my personal goal is to try to become an expert user of the classic method that the P&F experts have refined since 1955, as it has kept me on the right side of the market over the last year or so, as it caused me to exit stocks in May last year and not come back in until October. The current signals from all four are starting favour the bear side again, but the BPNYA is only on Bear Alert status currently and tends to make another reversal to the upside before giving a major sell signal, although there is a few exceptions to this. So currently although my position is to be defensive, the major trend is still on the bull side.

Below I've attached the percentage of stocks above their 50 day moving averages chart with a 1% box size, 1 box reversal and major trend lines. My observations of this is that because of the way the chart is set up on a scale of 0-100%, that the trend lines are too slow for short term moves and double top or double bottom breakouts or breakdowns would be the way to play it imo.



The medium term percentage of stocks above their 150 day moving averages chart with a 1% box size, 1 box reversal and major trend lines looks more useful in terms of the trend line crosses as the trend changes on the chart were all very good times to buy for a medium term/swing trader since the 2009 low. As it crosses to the upside in March 2009, downside in February 2010, upside in March 2010, downside in May 2010, then the upside again in September 2010, then the downside in May 2011 and then back to the upside again in late November 2011. So over the last 3 years except for the whipsaw in February and March 2010 it would have kept you in good shape as far as market trend was concerned. I've attached my cobbled together chart of the three years data.

Attached is the latest weekly and daily New Highs New Lows charts and the cumulative weekly and daily Advance Decline charts.