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Stock Market Review & Indicator Report Price & Volume Surges, Earnings Due, McClellan Oscillator, Summation Index, Advance Decline, Use the "Directory" to see what else is on this site. Directory Notice: We urge all trainees to learn how to read the indicator charts on the lower portion of this page. They are updated daily. Use the charts to perform your "market review" every day. The comments of media "gurus" have distortions and biases (in addition to their very poor timing) that will cause you to make decision errors if you take what they say at face value. The charts are extremely important tools by which a person can gain keen insights on the market, insights that can be very helpful to both the short-term trader and the long-term investor. Review the explanations periodically so that they become deeply engrained in your thought patterns regarding the market. We will make occasional comments and perhaps draw your attention to important developments. Note to visitors: We are not currently accepting new trainees. Details about fees and programs are not available at this time. 1. A free daily list of the 100 highest-momentum stocks in our database is at Momentum List 2. A free daily list of stocks that just surged in price and volume is at Surges 3. A free daily list of stocks making new highs is at New Highs
S&P500 Intraday Chart .
 This chart shows two systems created by Richard Donchian. The systems are applied here to the Dow Jones Industrial Average. The first system is the 20-day channel or 4-week rule (or system). The upper green line marks the high for the previous 20-days and the bottom green line marks the low for the previous 20-days. According to this system, a breakout above the upper green line is a bullish signal, and a breakout below the lower green line is a bearish signal. The second system is the Donchian (5x20) dual moving average crossover system. The red line is the 20-day moving average. The blue line is the 5-day moving average. If the blue line moves from below to above the red line, it is a bullish signal. If the blue line moves from above to below the red line, it is a bearish signal. The two systems do not necessarily give identical signals at the same time. They are very different approaches to the timing of bullish and bearish positioning. Many traders use these systems to time their buying and selling of individual stocks. To do so, of course, they generate the channels or moving averages for individual stocks of interest rather than for the Dow or a market index. We use them here as bullish/bearish indicators for the market. The last signal for Donchian's 5x20 dual moving average crossover system was a "buy" on 4/26/12. The 4-week rule gave its last signal (sell) on 4/10/12. Welles Wilder's Parabolic SAR System
 The chart on the left shows Welles Wilder's Parabolic SAR (Stop and Reverse) system. As prices trend up, the rising red dots below the price tend to accelerate upwards. The same thing occurs in a downtrend (except that the dots are above the price bars, and they accelerate downwards). When the price bar declines below the highest of the rising red dots, a sell signal occurs. When the price bar rises above the lowest of the declining red dots, a buy signal occurs. The system, designed for short-term traders, is very sensitive (it reacts to relatively small moves). A drawback of the system is that it tends to whipsaw during non-trending markets. However, it works well when the market is trending. The system is designed for active traders. Many short-term traders, therefore, use the system for trading individual stocks. The red dots are sometimes used for both buying and selling. Sometimes they are used only as reference points for placing stop losses. Here, the system is used as a bullish/bearish indicator for the market. The last signal for this system was a "sell" on 5/7/12. The McClellan Oscillator declined to -228 (see Chart 2 below where there is an explanation. A more exact reading is in the yellow box near the bottom of the chart). The Summation Index (an intermediate-term indicator) dropped to -1,268 (See below, Chart 2). The MBI (see Chart 3) shows the market as having a confirmed negative bias. The MACD gave a sell signal 5/4. The Chaiken A/D Oscillator declined with the Dow's decline (See Chart 4 and the explanation there). The stochastic oscillator declined to an greatly oversold 1.16 (Chart 4), and the Chande Momentum Oscillator closed at -68.5. (also in Chart 4). The balance of money flow declined to -.05 (see Chart 5 and the explanation there). [To jump to the charts being referenced here, click on Six Charts. To return to this discussion, click on the word "Review" that is placed just above those charts.] With regard to the R.C. Allen triple moving average system, the 4-day average has crossed back below the 9-day average and the 18-day average (and it is currently declining). The 9-day moving average (blue line in the chart) is declining and has crossed below the 18-day moving average (red line in the chart), giving us a sell signal.
We found 9 R.C. Allen alerts among the thousands of stocks in our database ("Up Alerts" = 1, "Dn Alerts" = 8). With a 30% minimum volume surge requirement, the ETF Alerts scanner found 8 stocks that generated one or more alerts (1 "Up" alert and 7 "Dn Alerts"). The Breakouts scanner found 22 stocks that generated an alert (these are always "Up Alerts"). Our StockAlerts scanner found 34 alerts in which there was a volume surge of 50% or more. Of those, 9 were "Up" alerts. Some of these are very sensitive alerts more likely to be of interest to short-term traders. Using a 50% volume surge filter, our dual moving averages Stock-Scanner found 32 stocks with one or more alerts ("Up Alerts" = 9, "Dn Alerts" = 28). Of the thousands of stocks in our database, 30.7% had positive 25-day momentum and 15.2% had positive 12-day momentum. Note: We do not always post all alerts found because of space limitations.
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Market Review: The Latest Closing Statistics
Some Figures are Rounded
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The Day's Biggest Price and Volume Surges (Gainers)
Company Earnings Reports that are expected tomorrow
Notice to New Visitors: We test assumptions commonly made by market "gurus" to see if they are valid. Below, we explain why we use the Dow rather than the S&P500 in our analysis, even though it consists of only 30 stocks. Another example is that a lot of people who like to consider themselves expert traders, prefer to use exponential moving averages rather than simple moving averages. That is part of the "popular wisdom" of the market. Exponential moving averages also seem to be more sophisticated. However, few have really tested the premise that exponential averages are better because they are more sensitive to the latest behavior. It turns out that the very fact that they are more sensitive to recent price action can actually be detrimental. Like nearly everything else that really works in the market, the truth of the matter is counter-intuitive. We have rigorously tested the profitability of simple against exponential averages. After conducting thousands of tests on thousands of stocks in large databases using every moving average from 3 days to 200 days, and testing them over decades of market behavior, we have proven to our satisfaction that the simple moving average is just as good if not better than the exponential moving average as a signal generator (in terms of bottom line profitability). Any gain in sensitivity of an exponential average can often be more than compensated for by simply using a slightly shorter simple moving average. Often the simple moving average allows more time for momentum to build in support of a signal before the signal is given, and that results in more significant (and more profitable) signals. In other words, being faster on the trigger is not necessarily better. Our studies confirmed the studies conducted by Merrill Lynch in 1978. Those studies showed that simple moving averages were superior to exponential moving averages. You may be wondering why we use the Dow as a signal generator in our "Market Review." Our statistical analysis of a variety of trading systems has convinced us that the Dow Jones Industrial Average gives better trading signals for "the market" than the S&P500. The signals appear to be encumbered with less "noise." Hence, they can be more precisely defined. When timing the market with no-load index funds, use of the Dow as the reference for our timing models gave us more profitable results than use of the S&P500. We do believe that the S&P500 better represents the market as a whole. However, if we were to "time" the S&P500 Index or an index fund based on the S&P500, we would prefer to use the Dow as our reference signal generator rather than the S&P500 Index itself. Note: Contrary to what brokerage houses and mutual funds want you to believe (because they want you to leave your money in their funds rather than move it around), it is possible to profitably "time the market." The average investor is just too emotion-bound and undisciplined Tto do it correctly. (We do not offer timing services.)
Wendy's Trading Result Long ago we proved to our own satisfaction (by trading with real money) that to obtain gains of more than 50% a year it is not necessary to invest in options, currencies, commodities or even to take on the risk of using margin leverage. It can be done simply by buying and selling stock in a cash account. All you need is a good discipline (and that you actually follow your discipline). That is what this site is all about. We do not make a practice of revealing the performance of company traders. There is little reason to do so, and it is nobody's business but our own. However, Wendy has given permission for us to share her performance on a one-time basis. After brokerage fees, her net return for the year (2009) was 58%. All she did to obtain this return was to buy and sell stocks. She simply cut losses quickly, focused on good setups, and looked for trigger events. When it was time to sell, she did not talk herself out of it or "argue" with the evidence. She also did not sit "glued" in front of her computer. She entered her trades and set her stop losses. Often, the only time she could check her positions was long after the market closed. She did not have to agonize about margined positions held overnight because they were not part of her discipline. It might also be worth mentioning that to optimize liquidity, to minimize the spread between bid and ask, and for risk-control reasons, Wendy prefers to avoid stocks that trade for less than $5. Most of the stocks she trades are followed in The Valuator. Wendy is a very private person who does not want to report her returns every year, so there is no plan to update this performance in future years. This report was posted shortly after the data was available, and it will be left here for future visitors. Please be aware that she did have major distractions during this year that almost certainly got in the way of her achieving a significantly greater return. In other words, this was by no means the best she could do. However, she allowed us to reveal her performance anyway in order to encourage others and to show that returns above 50% are achievable (even under less than ideal conditions). [Returns above 50% per year can be achieved by trading relatively high quality stocks priced above $5 in a cash account. The discipline used by Wendy is extremely low in risk, much lower than the risk assumed by the average mutual fund investor or the buy-and-hold investor in individual stocks. Yes, she could have achieved a much higher return if she had kept her positions leveraged. She does not wish to take that route. Greed destroys discipline. Here is a little known fact worth considering. 80% of the people who fully leverage their investments in the futures markets eventually lose all their money. Some people do well in the futures markets. The same can be said for some who trade penny stocks and currencies. However, it is not the use of leverage that makes a winner, but the use of a good discipline. Too many people don't get that fact. The discipline used to achieve the above return is our own creation. We do not make it available to the public as part of any service or training program. In other words, we are not providing this performance information to solicit your enrollment in any kind of program. It is provided only to encourage people to be diligent in the development of their own discipline. For more on Wendy read Question #10 on the Q&A page. We will leave this report here to encourage others who may be wondering if working at developing a discipline is worth the effort.] The Following Charts Are Updated Daily If the chart does not change, purge the cache. Your browser is "remembering" an earlier version of the page. If you do not know how to do this, search your browser's Help menu for "clear cache." Commodity Channel Index (CCI )
Traders often check the CCI to see if there is divergence between it and its underlying security. They also use it to detect overbought and oversold conditions. If the Dow is making new highs but the CCI is not, for example, then the Dow is likely to undergo a correction. The CCI usually ranges between +100 and -100. If it is above +100, the underlying security is considered to be overbought. If it is below -100, the underlying security is considered to be oversold. However, there is much more to the CCI than this. The CCI is a powerful analytical tool. For additional information on the CCI, see Tutorial 13. Volatility Measurements
Each of the above charts is labeled. The VIX is a measurement of "implied risk" and differs from the other two measurements in that it is not a direct measurement of price volatility. The VIX is related to the demand for puts and calls and their prices. Traders associate readings above 45 with investor fear. At these levels, we tend to see capitulation selling. People are giving up what remains of their positive attitudes about the market. This is seen as positive because it often means the market is bottoming. A reading of 30 is associated with high volatility (there is heightened fear and uncertainty in the market). Readings in the range of 20 to 25 are usually associated with a casual nonchalance on the part of investors. Readings below 20 tend to correspond to a lack of investor "enthusiasm" (the market may be nearing a top). The heavy dotted black line is the 50-day moving average of the VIX. In general, the VIX tends to increase as the market declines and decrease when the market is rising. Why? When the market is rising, it is believed to be less risky but more risky if it is on the way down. The other two charts are based on the S&P100 Index. The Chaiken Volatility Indicator calculates the 10-day moving average of the difference between the high and low for each day and then computes the percent rate-of-change of that moving average over the last 10 days. The premise is that a widening of the range between the daily high and low indicates an increase in volatility. Some believe that market tops are associated with an increase in volatility (because investors are expressing nervousness due to their increasing internal conflict between fear and the desire for more gain). Market lows are supposed to be associated with relatively low volatility because investors have been disappointed so often that they don’t expect much. Mr. Chaiken looks at it differently. He believes that if his volatility measurement indicates there has been a significant increase in volatility over a short time that a bottom is near (because it is a 10-day measurement, it is sensitive to a panic-like selling climax). He also believes that a gradual decrease in volatility over a long time is what you should expect as a bull market ages and approaches a top. The purpose of the Volatility Index is to let us know if the price action is becoming increasingly "frenzied" or "calmer" within a larger historical context. Here we begin our measurement by computing the standard deviation in closing prices over the last 20 days. For a historical context we use the 100-day average of the 20-day standard deviation. This enables us to see how the current 20-day standard deviation compares to its average over the last 100 days.
Four Investment Time Frames
 There is a saying in the market that "the trend is your friend." The idea is that people should buy when the trend is up and sell short only when the trend is down. In other words, it is foolish to buy when the trend is down or to sell short when the trend is up. This is a generalization. Traders can profitably take positions in either direction regardless of what the general trend of the market is. However, in taking a position opposite to the general trend of the market, the trader must adjust his strategy to compensate for the increased risk. He must also pick his stocks and entry points very carefully. With the above charts, we are attempting to illustrate whether the current trend is bullish or bearish within the context of four different time horizons. The blue, purple, and green lines are simple trend indicators. Here, we merely ask if the current trend of the market is up or down (bullish or bearish) short-term (blue line), intermediate-term (purple line) and long-term (green line). These trends are dotted to better show trend acceleration (dots spread apart) and deceleration (dots bunch together). The other chart (dark solid line) also shows the current trend, but from the perspective of the short-term trader. For each investment time horizon, the question answered is a simple one. Is the line rising or falling. More conservative investors and traders will wait for the trend associated with their preferred investment time-horizon to be supportive of the positions they intend to take. .
The DJIA Stocks So you can get a quick impression of what's happening in the market and at the same time review the general patterns of some major stocks, here are "snapshots" of all the stocks in the Dow Jones Industrial Average. [Note: The last change in the components of the DJIA took place on June 8, 2009. General Motors (GM) and Citigroup (C) were removed. Cisco Systems (CSCO) and Travelers Cos (TRV) were added.] The dark red line in each chart is the 50-day moving average. Each chart covers about nine months. To save space, no details are provided here other than the symbol (lower right corner) and the closing price (marked with a yellow highlight). A review of the strongest ETFs should give additional information about where the pockets of strength are in the market.
Market Review Indicator Charts Traders and investors are advised to make frequent reference to the following explanations until the meanings of the charts are immediately apparent with only a glance. At the beginning of the day, make it a regular practice to perform a market review by checking the status of each indicator. At some times the charts evolve slowly. Even when the charts are changing very slowly from one day to the next, however, the daily review will help "anchor" in your mind the market environment and the general context for your trading/investing decisions. A daily review will also help you to become sensitive to evolving market "setups" and signals. There are times when one or more charts will alert the careful observer to a significant change in the market that calls for a change in approach. Also, the charts do not always evolve slowly. The point we are making bears emphasis. You should always develop your strategy for the day only after evaluating the general status of the market and the context it gives for any trading plans you may devise. These charts are updated daily. NOTICE--Originally, we presented each of the following 6 charts (with its explanation) in isolation from the other charts. However, we have decided to try a new approach that we think might enhance overall comprehension. Instead of showing each chart separately, we will now show the following 6 charts simultaneously. That way, you won't have to spend a lot of time scrolling up and down to figure out how the charts counter or reinforce each other. Each of the charts is labeled. The label for each chart is in a blue box near the bottom left corner of the chart. Below the six charts there is a set of links, each one of which will take you to a discussion of one of the charts. Each discussion includes two links back to the charts. For example, the label for each discussion ("Chart 1," etc.) is a link back to the charts. At the end of each discussion is another link. We provide two links back to the charts because some of the discussions are lengthy, and we want to make it easy for you to navigate back and forth quickly. Previously each chart was viewed in isolation. It was not possible to see them all at the same time. This way, a click will take you to an explanation, and a click will take you back to a view of all the charts. This should make it easier for you to get a sense of the overall "picture" or status of the market. Review
Chart 2- The McClellan Oscillator is at the top of this chart. is a breadth-of-market indicator that is effective for interpreting short-to-intermediate-term market moves. The McClellan Summation Index(bottom part of chart) is a running total of each day’s McClellan Oscillator value. The Summation Index is effective for interpreting intermediate to long-term market moves. Together, they can be useful in evaluating the dynamics of the ebb and flow of the market, and in planning entry and exit points. McClellan Oscillator readings of 150 (plus or minus) are extreme and tend to correlate well with buying and selling climaxes in the market. The McClellan Oscillator reaches these extreme values, measuring overbought and oversold conditions, in advance of market turns. It then passes through zero at or very soon after market turning points (to put this in perspective, extreme readings occur much less frequently than a pass through zero. McClellan Oscillator passes through zero tend to indicate market reversals at approximately 2 to 6 week intervals). The type of action to be taken, if any, depends on the major trend of the market (as indicated, for example, by 50 and 200-day moving averages) and on whether the move originated from an extreme reading. Thus, in the early and middle phases of a bull market emphasis might best be placed on buy signals. In a bull market, buy signals occur earlier, and positions can be taken when the McClellan Oscillator clearly moves out of its basing pattern, even if it is still negative. In a bear market, sell signals occur when the oscillator moves clearly out of a topping formation, even if it is still positive. The amplitude of the oscillations above and below zero correlates with the general volatility of the market. The oscillator shows distinct cycles (lasting 22 to 24 weeks) between significant bottoming formations. Divergence between oscillator moves and conventional market indicators forecasts an impending change in market direction. Conventional trendline theory can be applied to oscillator patterns. For example, a triple top formation in the McClellan Oscillator forecasts a termination of the preceding up-trend. If the Summation Index is rising (or declining), it is intermediate-term bullish (bearish if declining) and the market’s trend is up (down if the Summation Index is declining). If the Summation Index is declining, the first positive sign will be a slight narrowing of the gaps between postings. The second positive sign the Summation Index will give is a flattening out of the entries (this stage is sometimes skipped). The third positive sign is a reversal in direction. The final positive sign is a slight increase in the distance between postings. Some investors use the latter as a buy signal (alternatively, some may use the second posting in the new direction as an early buy signal). They view the opposite conditions as negative, culminating in a sell signal. Because of their sensitivity, the declines and advances of these indicators can appear to be much more extreme than the actual movements in the market. Return to the six charts.
The Chaiken Advance/Decline Oscillator is next. It uses the same data that is used in the accumulation/distribution line. However, it is created by subtracting a 10-day exponential moving average of the accumulation/distribution line from the 3-day exponential moving average of the accumulation/distribution line. The premise for the Chaiken Advance/Decline Oscillator is that a healthy price advance is accompanied by strong volume accumulation (a rising Chaiken Oscillator). It is a positive indication if the Chaiken Oscillator declines while the Index declines (volume is not supporting the decline). Because volume drives rallies, lagging volume during a rally is a sign of weakness (the rally is "low on fuel"). The Chaiken Oscillator was designed to indicate the flow of volume into and out of the stock (Index in this case). Comparison of this volume flow to the NYSE Index can help identify tops and bottoms. For comparison purposes, we have placed a chart of the NYSE Index in the he middle of Chart 5. Look for divergences. When prices reach a new high or low, especially at an overbought or oversold level (see the Stochastic Oscillator), and the Chaiken Oscillator fails to make a new high then reverses direction, it is a warning that price direction is likely to change. The converse would hold when the Index is making new lows. Another use is to view a change in direction of the Chaiken Oscillator as a buy or sell signal, but only in the direction of the trend. For example, if the Index is above a rising 50-day moving average (the blue line weaving through the chart), then an upturn in the Chaiken Oscillator while it is in negative territory would be a buy signal. Below the middle chart of Chart 5 is the volume on the NYSE. The curved line superimposed on the volume bars is the 50-day moving average of the volume. A move in the Index accompanied by greater than average volume is much more significant than a similar move on mediocre volume. At the bottom of the chart you will find the Chande Momentum Oscillator. The use of the Chande Momentum Oscillator (CMO) is similar to that of the Relative Strength Index (RSI). However, the Chande Momentum Oscillator measures momentum directly by combining data for both up and down days in the numerator of its equation (The RSI uses up days only in its numerator). In addition, the Chande Momentum Oscillator or CMO does not have any built-in smoothing that would obscure very short-term momentum extremes (RSI has such smoothing and tends to obscure these details). The dashed lines in the bottom chart of Chart 5 mark the -50 and +50 levels of the indicator. The heavy black line is the zero line. Chande Momentum Oscillator indicates overbought (+50) and oversold (-50) conditions. For example, at –50 the downside momentum is 3 times the upside momentum. The Chande Momentum Oscillator can also be used to measure the degree to which the market is trending. The more extreme the CMO, the stronger the trend. A low CMO reading (close to "0") indicates the market is neutral or in a sideways trading range. The Chande Momentum Oscillator can help establish entry and exit points when used in conjunction with a trend-following indicator, such as a moving average. For example, if a moving average has turned positive, you could enter the market when the Chande Momentum Oscillator is advancing (the CMO, unlike a moving average, does not lag the market) and exit when it moves lower or when the moving average gives a sell signal. The moving average can give you the buy or sell bias and the CMO can function as your "trigger." Finally, look for divergences between the action of the Index and that of the CMO. For example, if the Index is making a new high (or low) and the Chande Momentum Oscillator is failing to surpass its previous high (or low), the CMO is "anticipating" a reversal in the Index. Return to the six charts. Chart 5- The Money Flow Indicator at the top of the chart attempts to measure money flowing in and out of a security. The movement of money into or out of the market can give us clues about the meaning of price movement. Look for divergence between the Chaiken Money Flow indicator and price action. If the price moves higher and Chaiken’s Money Flow indicator moves lower, the rise in prices is not supported by an influx of money, and the rally is likely to be short-lived. If Chaiken’s Money Flow is between zero and .10 (0 is marked by the horizontal red line and .10 is marked by the upper horizontal black line), then it is thought to be reflecting weak buying and it is not particularly bullish. However, Chaiken Money Flow readings above .10 are bullish. If Chaiken’s Money Flow is between zero and -.10 (the lower horizontal black line), then it is considered to be weak selling and it is not particularly bearish. Readings below -.10 are normally considered bearish. Readings of .20 are bullish (-.20 is bearish), and these levels are marked with heavy blue lines. Readings above .25 (the upper horizontal blue line) are very bullish and indicate higher prices are probably ahead. Readings below -.25 (the lowest blue horizontal line) are very bearish and indicate that lower prices are probably ahead. The flow of money often precedes price action. The NY Index and its 50-day and 200-day moving averages are shown at the bottom. Please note how the flow of money often precedes price action. However, money flow and price action will sometimes diverge. When this happens, do not trust the current price action of the index or security to continue. When money persistently flows into a stock, expect growth (rising prices). Return to the six charts.
The daily S&P500 is shown in the lower part of the chart. The dotted blue line is the 50-day moving average, and the purple line is the 20-day moving average. These are intermediate-term, and short-term trend indicators respectively. Return to the six charts. Gold Chart & Oil Index
The Gold Chart is Handy & Harmon Base Price The Oil Index is the OIX
Gold: Spot Bid Price
ABM CHKE DITC GCOM KFY LAKE LPTH MYRX SFD TITN TPLM TRR ULTA UNFI VRNT ZBB Stocks listed:16
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