Market Breadth

This is a discussion on Market Breadth within the Technical Analysis forums, part of the Methods category; Originally Posted by dentist007 hey isa..some nice charts there the plot from what i can see on the last chart ...

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Old Apr 14, 2012, 3:47pm   #15
 
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Re: Market Breadth

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Originally Posted by dentist007 View Post
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
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

Click the image to open in full size.

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.

Click the image to open in full size.

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 Thumbnails
market-breadth_signals.png   sharpchartv05-19.png   nya150r_since_2009.png  

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Old Apr 14, 2012, 8:59pm   #16
 
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Re: Market Breadth

isatrader started this thread Attached is the latest weekly and daily New Highs New Lows charts and the cumulative weekly and daily Advance Decline charts.
Attached Thumbnails
sc-6.png   sc-7.png   sc-4.png  

sc-5.png  
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Old Apr 15, 2012, 7:17am   #17
 
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Re: Market Breadth

hey isa
i thought i would spend a few minutes yesterday seeing if bullish perecnt would give me some decent trends on 1% and 1 box reversal...no way...i wasted my time,luckily only a few minutes.the chart range is from 0-100...so no real trends .whereas stocks/index etc have no real defined range
so..keep up the good work
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Old Apr 17, 2012, 11:10pm   #18
 
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Re: Market Breadth

isatrader started this thread The NYSE Percent of Stocks Above 50 Day Moving Average ($NYA50R) has today reversed back up into a column of Xs with 47.01% of stocks in the New York Stock Exchange now above their 50 day moving averages. Last Tuesday, 10th April, this dropped to it's lowest level since the November low point to 24.68%.

So 22.33% of stocks in the entire NYSE have managed to get back above their 50 day moving averages since then, which today has given a new short term buy signal with a double top breakout after breaking below the 30% level.

Attached is the chart

Click the image to open in full size.
Attached Thumbnails
nya50r_17-4-12.png  
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Old Apr 29, 2012, 12:53am   #19
 
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Re: Market Breadth

isatrader started this thread Attached is the latest weekly and daily New Highs New Lows charts and the cumulative weekly and daily Advance Decline charts. Both of which are showing good confirmation of last weeks move higher.
Attached Thumbnails
sc-11.png   sc-12.png   sc-13.png  

sc-14.png  
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Old Apr 29, 2012, 6:37pm   #20
 
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Re: Market Breadth

isatrader started this thread The market breadth signals continue to be short term positive rising to 58.78% of stocks now above their 50 day moving average, but with caution signals on the medium to long term measures. However, another X higher on the medium term measure of the NYSE Percent of Stocks Above 150 Day Moving Average ($NYA150R) will put that back to the bullish side again in the higher risk area. So it will still indicate a higher level of caution is necessary even if it does manage to turn bullish, so selective stock picking of stocks showing positive relative strength versus the market would seem wise imo.

Here's the updated market breadth table and the attached charts:

Click the image to open in full size.
Attached Thumbnails
market-breadth-table_27-4-12.png   bpnya_27-4-12.png   nya200r_27-4-12.png  

nya150r_27-4-12.png   nya50r_27-4-12.png  
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Old May 5, 2012, 10:34pm   #21
 
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Market Breadth Update

isatrader started this thread The short term positive signal from last week has turned around to Bull Correction status now, with the medium to longer term status's changing to Bear Confirmed as they both dropped below the key 70% level this week.

The percentage of stocks below their 150 day (30 week) moving average ($NYA150R) is a key one to watch now as it's approaching it's 60% level. Dorsey has done research that they call the 80-60-40 rule which shows that every time it drops to the 60% level from being above the 80% it then will reach the 40% level before it reaches the 80% again, so lets hope it manages to hold above that level this week or the bear case will become stronger.

Click the image to open in full size.
Attached Thumbnails
market-breadth-table_4-5-12.png   bpnya_4-5-12.png   nya200r_4-5-12.png  

nya150r_4-5-12.png   nya50r_4-5-12.png  
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