Mkt Tips

Market Review And Status of Indicators

The McClellan Oscillator, Summation Index, volatility measurements, the CCI, Chande Momentum OscillatorChaikin's Money Flow indicator, Chaikin's Advance/Decline Oscillator, MACD, interest rate spread, stochastic oscillator, and the gold & silver charts and their explanations are now on this page. All indicators can be reviewed by simply scrolling down this page.

Notice: We previously urged all trainees to learn how to read the indicator charts on the lower portion of this page.  They are updated daily.  Now we urge all subscribers to do the same.  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 insights that can be very helpful to both the short-term trader and the long-term investor.  We also suggest that you review the explanations periodically so your comprehension will be instant on viewing the charts.  Note to visitors: We are not accepting new trainees.

Use the "Directory" to see what else is on this site.Directory

1. A free daily list of high-momentum stocks is at Momentum List   2. A free daily list of stocks with high Relative Strength High RSI Stocks  3. A free list of stocks with a volume surge is at Volume Surges  5. Free interactive stock charting is at Charts.

Setups and Timing

See how we use "setups" to maximize our profit potential with our scanner reports


Time In New York

Time In California


S&P500 Index and Nasdaq Composite Index With R.C. Allen MAs
Click here and scroll down to blue type for explanations    S&P500, Nasdaq Composite Index, RC Allen's System      Green = 4-day MA, Blue = 9-day MA, Red = 18-day MA, Black = 50-day MA

Dow Jones Industrial Average (2 Days at 5-Minute Intervals)

The blue line is the opening level. 

In the above chart we have placed a horizontal blue line at the opening level.  Also, we have inserted a small red line at the midpoint of the trading range for each 15-minute period.  Press the Ctrl key and the + key to magnify (or - to reduce).
Click and Go To Item #14 To See Why The Dow is Important For Indicators and Analysis

 

 Daily Chart of The Dow Jones Industrial Average
An Analysis of Short-Term Movement

The Dow

Green = 4-day MA, Blue = 9-day MA, Red = 18-day MA

We decided it would be informative to demonstrate here R.C. Allen's system. An "UP" alert occurs when the 4-day MA (green) is above the 9-day MA (blue). The actual "buy" signal occurs when the 9-day MA crosses above the 18-day MA (red) while the 4-day MA is still above the 9-day MA. If the 4-day MA is not still above the 9-day MA, there is no signal until it crosses back above the 9-day MA. Signals occur only if all moving averages align correctly. The opposite conditions generate a "DN" alert and "Sell" signal. Please use the "R.C. Allen Alerts" tab on the left of your screen for a more complete explanation of the system.  This chart shows only a few months so you can more easily see details of recent action and a clearer view of the moving average alignments. 

Updated after close on Mon, 12/11/17  --  A rally in telecommunications and technology shares drove the benchmarks higher, with the S&P 500 index and Dow industrials closing at records.  The Dow gained 56.87 points, the S&P 500 gained 8.49 points, and the Nasdaq Composite Index gained 35 points.  The telecoms sector led the gainers, rising 1.2%, and technology shares rose on strength in chip makers. ~ The number of job openings dropped from 6.18 million in September to less than 6 million in October.  The Labor Department reported that about 5.55 million people were hired and 4.85 million lost their jobs. ~ Today, investors were mostly looking ahead to the Federal Reserve’s two-day monetary-policy meeting, which is scheduled to conclude Wednesday.

Updated after close on Fri, 12/8/17  -- Both the Dow and the S&P 500 closed at records after the November jobs report revealed much more strength than expected.  The Dow rose 117.68 points, the S&P 500 rose 14.52 points, and the Nasdaq Composite Index rose 27.24 points.  The market's advance had breadth, with 10 of the 11 main S&P 500 sectors closing higher.  Materials, the only decliner, closed down by less than 0.1%.  Health-care stocks gained 1.1%.  Energy shares gained 0.9% (there was a 1.3% gain in the price of crude oil). ~ The economy created 228,000 jobs in November, according to the nonfarm payroll report. The unemployment rate remained at 4.1% and wages rose 0.2%.  Wholesale inventories fell 0.5% in October. ~ After days of tense negotiations, The mood of investors in Europe was lifted when Jean-Claude Juncker, president of the European Commission, said that “sufficient progress” has been made in talks between the U.K. and European Union regarding Brexit for talks to move on to the second phase, which will cover trade agreements and a potential transition period.  European stocks rallied on the news. ~ Talking heads have been looking for at least a 3% decline, but it is obvious to us that the market is not yet ready for that.  After its peak on 12/4, the Dow "corrected" by only 432.80 points (1.076%) before resuming its climb to higher levels.  However, the more significant correction may come after a tax bill is agreed on by both the House and the Senate.  Investors are buying on the expectation and may sell on the realization.  Selling at that time would enable the market to consolidate its gains and lay the foundation for the next phase of the bull market.

Updated after close on Thu, 12/7/17  --  Stock benchmarks closed moderately higher, with the S&P 500 powered by gains in the technology, industrials and materials sectors. Traders focused on continued progress on tax legislation.  Investors are expecting a positive monthly jobs report on Friday (economists are projecting an addition of 200,000).  The Dow gained 70.59 points, the S&P 500 index gained 7.71 points, and the Nasdaq Composite Index (heavy in techs) gained 36.47 points.  The Senate late Wednesday agreed to begin formal negotiations with the House, lifting hopes that the final tax overhaul will be completed by Dec. 22.  Trump will meet congressional leaders on Thursday to outline a method of keeping the government open. A bill to avoid a shutdown will be voted on in the House on Thursday. ~ It is our view that the tech stocks are on a move that will recover territory lost in recent days.  We believe this represents a great entry point.

Updated after close on Wed, 12/6/17  --  Stocks ended mixed on Wednesday.  Weakness in the energy sector offset a recovery in the technology sector.  Energy shares fell 1.3% and crude oil fell 2.9%, while technology shares rose 0.8%.  The Dow fell 39.73 points, the S&P 500 fell 0.3 point, and the Nasdaq Composite Index rose 14.16 points.  The corporate alternative minimum tax retained in the Senate version of the tax bill is considered to be a factor in tech-stock selling. The House’s version repealed the corporate AMT. ~ Private-sector employers added 190,000 jobs in November. ~ Investors may get the jitters over the prospect of a U.S. government shutdown. Federal government operations are funded through Friday.  Brakes are being applied to the negative momentum in the technology sector.  A number of those stocks are developing a positive bias.

Updated after close on Tues, 12/5/17  --  Stock-market benchmarks closed lower on losses in the utilities, telecoms and industrials sectors.  The S&P 500 index fell 9.87 points.  Weakness in the market was broad-based.  All but the technology sector closed lower. Utilities and telecoms suffered the most, down 1.8% and 1.2%, respectively.  The Nasdaq Composite fell 13.15 points, and the Dow fell 109.41 points. ~ The trade deficit in October jumped 8.6% from $44.9 billion to $48.7 billion.  The Institute for Supply Management’s index of service-oriented companies fell from 60.1% in October to 57.4% in November.  Over 50% is viewed as positive for the economy, and anything over 55% is considered outstanding. ~   It is not a good sign when benchmarks sell off toward the end of a session.  It suggests there may be additional selling pressure in early in the day tomorrow.  The increasing strength in some tech stocks may be an indication that the pullback in those stocks may be coming to an end. 

Updated after close on Mon, 12/4/17  --  The Dow closed at a record level on investor enthusiasm over the passage of the Senate version of the tax overhaul. However, the S&P 500 and the Nasdaq declined on selling of large-capitalization technology shares.  The Dow gained 58.46 points, the S&P 500 lost 2.78 points, and the Nasdaq Composite Index lost 72.22 points.  Apple lost 0.7%, Facebook lost 2.1%, Microsoft lost 3.8%, Alphabet lost 1.3%, Amazon.com lost 2.4%, and Netflix lost 1.5%. ~ Selective selling continued today, but there is little in the way of significant market-related information that has not already been addressed.  Enemies of the Trump administration are angling to build a case of "obstruction of justice" against Trump, with the ultimate goal of impeachment.  The market is focused on the prospects of tax reform.

Updated after close on Fri, 12/1/17  --  Stocks closed lower on news Michael Flynn was pleading guilty to lying to the FBI and promising full cooperation with the special counsel’s Russia investigation.  However, all three benchmarks recovered from early losses on optimism over the likelihood of additional progress on tax-cut legislation (Senate Majority Leader Mitch McConnell said Republicans had the votes to pass the Senate tax bill).  The Dow closed down 40.76 points, though it was down about 300 points at its low of the day.  The S&P 500 SPX closed down 5.36 points, and the Nasdaq Composite Index lost 26.39 points.  For the week, the Dow rose 2.9%, the S&P 500 rose 1.5%, and the Nasdaq fell 0.6%. ~ The Markit manufacturing purchasing managers index fell fro0m 54.6 in October to 53.9 in November. The ISM manufacturing reading fell from 58.7% in October to 58.2% in November. ~ There has been talk about rotation out of tech stocks.  Do not let this rattle you if you are invested in such stocks.  Expert traders unloaded shares early in the decline, and many will be reinvesting later.  Portfolio managers are still over-weighted in them.  They have simply made a small adjustment, that could easily be explained as the result of some profit-taking.  Remember that these companies are strong growth engines.

Updated after close on Thu, 11/30/17  --  Stocks rallied Thursday, with the Dow closing above 24,000 for the first time in history.  The Dow surged 331.67 points, the S&P 500 index rose 21.51 points, and the Nasdaq Composite Index rose 49.58 points.  Big tech stocks rebounded (Facebook rose 1.2%, Amazon.com rose 1.3%, and Apple rose 1.4%).  All 11 of the S&P 500’s main sectors closed higher, with by energy shares among the strongest.  During this month alone, the Dow advanced 3.8%, the S&P 500 gained 2.8%, and the Nasdaq rose 2.2%. ~ Jobless claims came in below forecasts in the latest week, and layoffs remained near 45-year lows. Consumer spending rose 0.3% in October. ~ In our opinion, it would be a good idea to update your stop losses before the market opens tomorrow.  While the strong momentum might continue, today's move was very robust, and a pullback could take place at any time.  Even if the tax-revision effort runs into headwinds, however, the long-term direction of the market will be to higher levels.

Whether the market is weak or strong, there are always opportunities for profit in the market.  Here are a few examples of stocks that have had a recent surge.  Just because they have already had an advance does not mean that their advance is over.  If any have just declined, they may simply be offering a better entry point.  There are those who know how to take advantage of such situatons.  We make no recommendations regarding these stocks.  We only wish to assure you that there are plenty of opportunities in the market.  The following five stocks are taken from the bottom of the "HotStocks" subscriber list.  Obviously, the more highly ranked stocks are likely to be more interesting, but they are reserved for subscribers only.  We do not pick the best stocks from the bottom of the list, but simply the bottom five.  So, sometimes there may be unattractive stocks listed here.  This short sample is updated daily.  Information on the HotStocks list  .   

 



The PAL Report

     Updated after close on  12/11/2017  --  The Key Bullish Intraday Level to watch for Tuesday is 24,405.  The Key Bearish Intraday Level to monitor is 24,366.69.  If the Dow is above the Key Bullish Level (or below the Key Bearish Level) for more than 30 minutes of the first hour of trading, it will have an 80% probability of closing higher (or lower) for the day.  These probabilities assume there are no news events that modify investor sentiment between now and the close on Tuesday.
     For Tuesday,  if the action of the Dow relative to the above Key Intraday Levels indicates a higher close, the highest probability scenario is that it will close in the range between 24,386 and 24,559.  If the action indicates a lower close, the highest probability scenario is that it will close in the range between 24,213 and 24,386.  There is a 30% probability that the Dow will move higher than or lower than the range given, but if it does either, it will likely be the result of news events.  The following levels of resistance and support have been detected by PAL (not arranged in order of occurrence).  Some of these supports are dynamic.  That is, they change from day to day.  There is minor overhead resistance at 24,534.  Tomorrow, there will be support at about 24,262 and at 23,870.  These levels of resistance and support are in addition to levels described earlier or illustrated in the chart.
     Signals & Outlook:  1.) The last short-term signal for the Dow was a buy signal.  Short-term, the market environment is providing some support for Dow stock investments.  Alignments are very bullish.  2.) The last intermediate-term signal for the Dow was a buy signal.  For this time-horizon, the market is supportive for Dow stocks in a good setup configuration.  3.) The last long-term signal for the Dow was a buy signal.  For this investment time-frame, the market is generally supportive of investments in Dow stocks in a good setup configuration.
         

See "Group Pressure Gradient"      See Discussion of "Key Intraday Levels" & Pivot Levels


NYSE Data

     The total number of issues traded on the NYSE was 3038.  Of those, 1571 advanced, or 51.71% of the total.  That is a change of -8.66%.  There were 1336 issues that declined, or 43.97% of the total, a change of 14.88%.  The total volume of shares traded on the NYSE rose 5.93%.

 

S&P 500 Data
The percentage of stocks that advanced today =  53.4%. 
The percentage of stocks that declined today =  44.3%. 
The percentage of stocks that were unchanged today = 2.4%
The average loss of the declining stocks = -0.67%. 
The average gain of rising stocks =   0.90%. 
The 50-day average volume of all stocks in the S&P 500 =  3,840,907,015. 
Today's total volume of the stocks in the S&P 500 =  1,760,780,703. 
Yesterday's total volume was 1,845,266,281. 
Since yesterday, this volume has declined (-4.80%). 
The percentage of S&P 500 stocks at or above their 50-day moving average = 76.8%.  
The percentage of S&P 500 stocks below their 50-day moving average = 23.2%.  
Stocks with a rising 10-day moving average = 76.0%. 
Stocks with a declining 10-day moving average = 22.8%. 

             

    xxChaikin Money Flow and A/D Oscillator   
These charts have not been updated for Friday.  They will be after we collect the needed data.

Chaikin Money Flow and A/D Oscillator

     The upper chart above is the Chaikin Money Flow indicator.  It 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 divergences between the Chaikin Money Flow indicator and price action.   For comparison purposes, we have placed a line graph of the Dow (light gray) on the chart. Look for divergences.  If the price moves higher and Chaikin'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 Chaikin's Money Flow indicator is between zero and .10 (0 is marked by the solid horizontal black line and .10 is marked by the upper dashed horizontal black line), then it is thought to be reflecting weak buying and is not particularly bullish.  However, Chaikin Money Flow readings above .10 are bullish.  If Chaikin's Money Flow is between zero and -.10 (the lower dashed 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 dashed 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.  Please note how the flow of money often precedes price action.  However, money flow and price action will sometimes diverge.  When that happens, do not trust that the current price action  of the Dow will continue.  When money persistently flows into the Dow, expect an advance. 
    
The lower chart above is the Chaikin Advance/Decline Oscillator.  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 he accumulation/distribution line from the 3-day exponential moving average of the accumulation/distribution line. The premise for the Chaikin Advance/Decline Oscillator is that a healthy price advance is accompanied by strong volume accumulation (a rising Chaikin Oscillator). It is a positive indication if the Chaikin Oscillator declines while the Dow 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 Chaikin Oscillator was designed to indicate the flow of volume into and out of a stock (the Dow in this case). Comparison of this volume flow to the Dow's action can help identify tops and bottoms. For comparison purposes, we have placed a line graph of the Dow (light gray) on the chart. Look for divergences. When prices reach a new high or low, especially at an overbought or oversold level (see the stochastic oscillator), and the Chaikin Oscillator fails to make a new high or low and then reverses direction, it is a warning that price direction is likely to change. Another use is to view a change in direction of the Chaikin Oscillator as a buy or sell signal, but only in the direction of the trend. For example, if the Dow is above a rising 50-day moving average, then an upturn in the Chaikin Oscillator while it is in negative territory would be a buy signal, especially when the Dow is very close to the 50-day moving average. A scale is not shown because it is not necessary. The important thing is the movement (highs, lows, and direction) of the indicator (red line) relative to that of the Dow (light gray line).


Support and Resistance

You may wonder why we are always talking about resistance and support. The fact is that nobody knows what the market will do next. However, knowing the location of support and resistance is extremely helpful to tactical positioning, regardless of what the market does. It is the most important, useful, and reliable information a trader can have. For example, placing a stop loss just below support can minimize loss if the market works against the position. That reduction in risk can enable a person to take a position when it would not be advisable otherwise. A stop order to buy placed just above resistance can enable a person to take a position early on a breakout with minimum risk and without a need for constant monitoring. Also, knowledge about the strength and location of support or resistance can be a help in estimating the probabilities associated with the market's next move, or how far it is likely to be able to continue in a particular direction.



Group Pressure Gradient Comparisons

See Explanations Of Various Readings

Group Pressure Gradient

     The market has an effect on shares analogous to the effect of air currents on an airplane. The greater the speed of the wind, the more difficult it is for a plane heading into the wind to make headway. However, a plane moving in the direction of the wind will find it much easier it to make headway and to gain speed. An airplane has its own driving force, but the plane's environment exerts its external force on the plane. Likewise, shares have their own motion based on supply/demand considerations pertaining to those shares, but the environment in which the shares exist exerts forces on the shares that are unrelated to the merits of specific shares within that environment. We refer to this "force" as the Group Pressure Gradient, and we sometimes refer to it as the "Force of Trend." A Group Pressure Gradient (or Force of Trend) reading near zero might be compared to flying on a windless or near windless day, and a reading of 28 might be compared to flying with a gentle to moderate tail wind. To continue the analogy, a reading of 28 to 57 might be compared to flying with a moderate to strong tail wind, while a reading of 57 to 85 would be like flying with strong winds to gale level tail winds. Negative readings would reverse the above comparisons. Of course the analogy is not perfect because a pilot would not want to fly in gale winds, but we certainly would not mind investing in shares when the market is registering 57 to100 on the pressure gradient scale. The scale ranges from -100 to +100. The Group Pressure Gradient has both magnitude and direction. Hence, it is a vector.
     A river or stream has many currents, cross-currents, counter-currents, eddies, and minor whirlpools. If a person wants to know what the pressure gradients are in a stream, he must select a specific spot in the stream to conduct his measurements. The same thing applies to pressure gradients in the stock market. To measure a pressure gradient, it is necessary to select a specific group of stocks within the market. We are currently calculating this indicator for three groups of stocks: large-cap blue-chips, stocks listed on the Nasdaq, and stocks that make up the S&P500 index (the last time we checked, the S&P500 consisted of 50.8% mid-cap, 45.4% large-cap, and the rest were small-cap). Measurements are not made for individual stocks in isolation. It is the general environment of the stocks in these groups that is being measured. Please be aware that some big-cap blue-chip stocks are in the Dow, in the S&P500, and on the Nasdaq. Each grouping has its own group pressure gradient. Therefore, in such cases, it is best consider each environment but give the strongest weighting to that of the Dow (because the Dow has the greatest relative concentration of investors in blue-chips who also represent the biggest relative concentration of big money). If you are not investing in blue-chips, then you might give more weighting to the S&P 500. If you are investing in a portfolio of technology stocks, then give emphasis to the reading for the Nasdaq. Usually the groups have similar readings, but sometimes they are quite different. It is also important to understand that an index (like the S&P500) may rise on a given day while the pressure gradient of the group of stocks that define the index is still negative. Individual stocks within a group can surge (because of a news event, for example), even when there is a negative pressure gradient.
     The indicator is extremely sensitive and can change dramatically from day to day. It might be best to think of it as measuring the current status of the pressure gradient. Earlier, we gave the analogy of an airplane flying with or against the wind. Bear in mind that air currents are constantly shifting in direction and inten

 

Pivot Points

Pivots, supports, and resistances 

Explanation    

     A pivot point is a price level that is used by traders as a predictive indicator of market movement.  A pivot point and the associated support and resistance levels are often turning points for the direction of price movement in a market. Prices tend to swing between two levels. For example, if a price is right at the first level of support ("Support 1"), the probability is that it will move back toward the "pivot point" These levels are very weak, and have most relevance for intraday action.  In an up-trending market, the resistance levels may represent a ceiling level in price above which the uptrend is no longer sustainable and a reversal may occur. In a declining market, the support levels may represent a low price level of stability or a resistance to further decline. Pivot points were originally used by floor traders in setting key levels.  Before the market opened, floor traders would calculate the pivot points for the day. With these pivot points as the base, additional calculations were used to set support 1, support 2, resistance 1 and resistance 2. These levels could then be used as trading aids throughout the day.  The resistance levels are where sellers are likely to enter the market, depressing prices.  Therefore, it is significant if a stock can push its way through the selling pressure.  It takes buying demand to push shares higher through levels at which sellers are waiting.  Likewise, the support levels are where buyers are likely to enter the market, exerting upside pressure on prices. Therefore, it is significant if a stock declines through the buying pressure.   It takes significant share selling for shares to continue dropping, even through levels at which buyers are waiting.


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, or commodities. It can be done simply by buying and selling stock. 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. That means by the time you read this, the performance date may be long past. That cannot be avoided without regular updates, and this is a one-time report.
     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 in a very bad market. 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).
     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 highly 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 Buy and Sell Signals of 6 Systems

These systems cover different investment time-horizons.  Each system uses two moving averages, with the exception of the R.C. Allen system, which uses three averages.  If the short moving average (MA) is above the long MA, the configuration is considered to be "Bullish" because the current momentum has taken a more positive aspect relative to the longer MA.  A bullish pattern is indicated by an up arrow .  If the short MA is below the long MA, the configuration is "Bearish" in its implications.  A bearish pattern is indicated by a down arrow .  Thus, the direction of the arrow indicates the direction of the last crossover event.  When a signal is generated, the word "Buy" or "Sell" will appear.  These signs are not recommendations.  They merely indicate the crossover event (the short MA has just crossed the longer MA), indicating a change from a bullish to bearish outlook or from a bearish to bullish outlook.   When the signal is generated, there will be a "" at the right of the word "Buy" or "Sell" to draw your attention to the event.  The red arrow will display for only the day on which it is generated.  The following day the arrow will be gone when the table is updated, and the up arrow or down arrow will replace the word "Buy" or "Sell."  The down arrows are shifted to the right to make it easier to spot the difference at a glance.  The table should be of interest to short-term, intermediate-term, and long-term investors.  For example, when the outlook for the S&P 500, Dow, or the Nasdaq Composite Index is "Bullish," the general trend of the Index is supporting bullish positions in those and stocks similar to those in the indexes.  Also, some people may use the signals of one of the following systems to time entries and exits for their Index-tracking ETFs. That is, these signals may be of use in timing when to be in and when to be out of the market, based on the preferred system or investment time-horizon.

  Buy and Sell Signals Of Six Systems  


Indexes And Measurements

Market Stats

Stocks In The Dow

The following charts cover the last 9 months. The red line in each is the 50-day moving average. Because there are so many stocks in a small space, we have not included the names of the companies. However, the symbol for each is in the lower right corner of each chart. The closing price for each is in a box on the right side of the chart.  The charts are intended to give you a quick overview of the Dow stocks and an idea of which industries may be doing well or poorly.  You can get a close-up of these charts by pressing the "Ctrl" key and the "+" key at the same time (pressing the "-" key will shrink the image).  Most of the items in the table below the charts are self-explanatory.  The "Up Volume" entry is the percentage of the total volume that is associated with an advance.  Therefore, "Up Volume = 65%" means that 65% of the total volume of the Dow stocks was up volume and 35% of the total was down volume.  Note, also, that in the lower right-hand corner of the table the Tick and TRIN  are indicated for the NYSE.
     TRIN is (The number of advancing stocks/The number of declining stocks)/(The composite volume of advancing stocks/The composite volume of declining stocks).  A reading above 1.00 is bearish, a reading below 1.00 is bullish and a reading of 1.00 indicates a balanced market. The more the TRIN deviates from 1.00, the greater the contrast in force between buying and selling on that day. A reading that exceeds 3.00 is interpreted as indicating an oversold market and that bearish sentiment is overdone. A reading below 0.50 is interpreted as indicating an overbought market and that bullish sentiment is overdone.  The figure may vary a little with different publishers depending on when the calculation is made.  Data often keeps trickling in after the market's "official" close.
    
Tick is the difference between the number of stocks that closed higher than their previous trade (i.e. closed on an uptick) and the number of stocks that had closing prices lower than their previous trade (i.e. closed on a downtick). A closing tick is thought to indicate strength or weakness in the broad market. Because buying at the close generally indicates market strength, a series of positive closing ticks indicates bullishness, and a series of negative closing ticks indicates bearishness. The most widely watched closing tick is that of the New York Stock Exchange (NYSE).

 Dow Stocks


 


Chande Momentum, Stochastic Oscillator, Relative Strength, CCI, &
Demand Index for the Dow, Nasdaq, and S&P500



Market Review Indicator Charts

Traders and investors are advised to make frequent reference to the following charts and their 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 evolving 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 change 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.  Below the charts is a set of blue links.  Each link will take you to an explanation of a chart.   At the end of the explanation is a blue link that will take you back to the charts.

Six Market Indicators

Interest Rate Spread NYSE  Stochastic  CMO CCI - Standard
McClellan Summation & Osc MACD Market Bias Indicator 

Explanations

Market Bias Indicator

    The Market Bias Indictor (MBI) is useful in evaluating the general status of the market and the nature of any investment strategy shifts that may be necessary to adjust to the prevailing market environment. For example, when the market has a negative bias (as shown by the Market Bias Indicator), it might be wise to move to cash, switch to a fund that goes up while the market goes down, place stop-loss orders on all positions, or to be extra cautious about taking new positions. When the Market Bias Indicator "says" the market is favoring buyers, it is not as likely to punish investor aggressiveness (equity growth is expected).
     If the black line of the Market Bias Indicator (the indicator line) is above the blue horizontal line, we believe the market is favoring buyers. Here, the Market Bias Indicator is "bullish" (it is probably okay to hold our positions or to take new ones). In this market environment, ignore the broken red line unless you are an aggressive trader. If you are an aggressive trader, while the black line is in "positive territory," a move above (or below) the red broken line is a buy (or sell) signal respectively. A rising (or falling) green line must confirm either of these signals before action is taken. The green line is the "confirmation-line" of the indicator. If the black line falls below the horizontal line, we believe the market is favoring sellers. That is, extra caution is in order. The Market Bias Indicator (MBI) suggests a "sale attitude" only if the green line is declining while the black line is in "negative territory" (below the horizontal line). While the black line is in "negative territory," a move above (or below) the red broken line is a buy (or sell) signal respectively. Again, a rising (or falling) green line must confirm either of these signals before action is taken. The green line will shift its position over time (appearing higher or lower relative to the other lines and the horizontal line). However, the shape of the green line will not change. The relative placement of this line is not relevant. Only its direction is important.

     The Market Bias Indicator is sensitive. For example, when we focused it on the Dow back in the 1980's, it was able to give a "sell signal" two days before the meltdown in 1987. Though it is sensitive, it avoids whipsaws better than most indicators. While there are numbers that determine line placement in this chart, this indicator was intended from the beginning to be a visual indicator only. The story is told by position above or below the horizontal line, not by the exact numbers for the distances. It does not add any more useful information to know that one day it is 25 points above the line and the next day it is 15 points above the line. We can visually determine that it is closer to the line and estimate its rate of approach. The same thing applies to each of the lines in the indicator. Which ones are above or below which others and which direction are they headed are the important issues rather than the quantitative readings for each. We want people to be able to glance at the chart and see a "picture" that tells them all they need to know. We do not even look at the numbers ourselves when we use the indicator. If we ever decide to place the indicator in the public domain, it will be necessary to divulge the equations used and the data needed. However, the indicator is available nowhere else on the planet, and that serves our purpose at this time. Systems and strategies tend to lose their power when they are widely disseminated.
     All indicators, including this one, should be used in conjunction with other methods of analysis. Bear in mind that an MBI buy or sell signal is not necessarily a buy or sell signal for individual stocks in your portfolio. These signals are merely indicators of market bias. Individual stocks should always be bought or sold on the basis of their own merit or lack thereof. Back to charts

MACD

    The MACD (Moving Average Convergence/Divergence) is a popular buy/sell indicator. Here it is applied to the broad market (NYSE) because it includes all the stocks on the NYSE rather than just those in the Dow or the S&P500. The MACD is the dark blue line. The "trigger line" is the dotted red line. The latest reading is in the top left corner of the chart (blue). The basic MACD rule is to sell when the MACD falls below the broken signal line and buy when it rises above its signal line. A crossing of the zero line is a confirmation of the signal. The MACD can give buy/sell indications in three ways: signal line crossovers (the indicator is bullish if it is above its broken signal line and bearish if it is below this line), overbought and oversold conditions (the MACD is in an Overbought/Oversold range when it pulls dramatically away from the broken line; when this occurs, it is likely that the market is overextending and will soon reverse direction), and divergences (a bearish divergence occurs when the MACD is making new lows while the market (as measured by the S&P500, or NYSE) fails to reach new lows; bullish divergence occurs when the MACD is making new highs while the market fails to reach new highs (these divergences are most significant if the market is overbought or oversold).
      Though divergences can be used as an indicator of a potential trend reversal; they can also be used as an indicator of a trend continuation. When there is an uptrend, a reverse divergence (or hidden bullish divergence) occurs when price is making a higher low, but the oscillator is indicating a lower low. This suggests that the current uptrend is likely to continue. In a downtrend, a reverse divergence (or hidden bearish divergence) occurs when price makes a lower high, but the oscillator is indicating a higher high. This suggests that the current downtrend is likely to continue.  Back to charts

Interest Rate Spread

     The Interest Rate Spread chart shows the pattern of change in the spread between short-term and long-term Interest rates over recent months. The last reading (multiplied by 10) is inserted in the scale on the right side of the chart in a yellow box. Simply move the decimal point one place to the left to get the current reading. When the spread between short-term rates and long-term rates is +1.3% to +2% (short-term lower than long-term), the economy is thought to be in for a normal growth rate in the vicinity of 2% to 3%. If the difference is more than that, it is probably because the Central Bank is making money more easily available and the economy will likely undergo accelerated growth. When companies can get cheap money, they can more easily afford to invest in projects, facilities, and equipment that will expand business or improve operations. If the interest rate spread is negative (short-term money more expensive than long-term money, then money is being made more difficult to obtain by the Central Banks (they are attempting to reduce the rate of inflation). This will, of course, slow down the amount of capital investment made by companies. Economic expansion will be mitigated. If the spread is a negative 1.5% (or even more), then the probability is 70% that economic recession will occur within a year. This information can be the basis for some general guidelines. If the spread is negative, make stop losses hug price action more snugly and use other techniques you may be aware of to guard or enhance assets in the event of market decline. If the short-term rate is enough higher that the interest rate spread is -1% or more, cash might be your best option. If the chart indicates that the current spread is .76, then the current spread is a little more than ¾ of 1%. The fact that the number is positive (the line is above zero) means the long-term rates are greater than the short-term rates. If the number is negative (the line is below zero) it means the short-term rates are greater than the long-term rates. a.) If the spread is negative, tighten stops or take other protective measures. b.) If short-term rates are 1% or more higher than long-term rates, cash might be a more appropriate investment (Remember that the bear market that began in 2000 started under these conditions). c.) When the spread between short-term and long-term money is less than 1%, higher-quality growth stocks are better candidates. d.) When short-term money costs 1% to 3% less than long-term money, stocks are generally even more likely to be profitable. A greater variety of stocks will advance in valuations. e.) If the spread is more than 3%, assume that inflation is just around the cornerBack to charts

Stochastic Oscillator

     The Stochastic Oscillator chart above is referencing the NYSE Composite Index. This Index includes all stocks listed on the New York Stock Exchange. The Stochastic Oscillator is a short-term indicator. It can be helpful in estimating when a security (or index) is likely to change its direction in the near future. Most technicians consider it a "buy" signal when the Stochastic Oscillator falls below 20 (a few technicians use 30) and then moves above that level, and a "sell" signal when the Stochastic Oscillator rises above 80 (a few technicians use 70) and then falls below that level. The Stochastic Oscillator can remain above 80 (or below 20) for prolonged periods while the stock or index continues moving to higher (or lower) levels. If the stock (or market) is non-trending (moving sideways confined within upper and lower parallel boundaries), then trades based on overbought or oversold levels should produce the best results. However, if the market is trending upwards or downwards, then the Stochastic Oscillator can be used to enter trades in the direction of the trend. There are also more aggressive traders who consider it a "buy" signal when the blue line rises above the dotted line and a "sell" signal when it falls below it. Also, look for divergences. When the market is making a series of new highs and the Stochastic Oscillator is failing to surpass its previous highs, the oscillator is giving us a warning signal.
     The Chande Momentum Oscillator is in the same chart.  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 (the RSI has smoothing and tends to obscure these details).  The black solid line is the zero line.  The dashed horizontal lines in the chart mark the -50 and +50 levels of the indicator.  The Chande Momentum Oscillator indicates overbought (+50) and oversold (-50) conditions.  For example, at -50 the downside momentum is 3 times the upside momentum, and at +50 the upside momentum is 3 times the downside momentum.  These levels are extreme and tend to be followed by a reversal of the Index (though the reversal may not be immediate).  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 movng 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 be used to define a 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.  The CMO in the chart is based on 14 days.  The dotted black line is the 10-day simple moving average of the CMO.  This line can aid in initiating a trade before the CMO crosses the zero line.  For example, a person could buy when the CMO crosses above the average instead of waiting for it to cross zero.  He could sell when the CMO crosses below the average.  Just be aware that this approach can give premature signals.  Back to charts

Commodity Channel Index or CCI (NYSE Composite)

     The Commodity Channel Index (CCI) measures the deviation of a security's price from its statistical mean.  The above chart is the 20-day CCI.  High readings indicate that prices are relatively high in comparison to average prices, and low readings indicate prices are relatively low in comparison to average prices.  The name of this indicator is somewhat misleading, since it is not limited in its usefulness to only commodities.  It can be used with any security.  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.
     Lambert designed the CCI so that approximately 70 to 80 percent of CCI values would be between -100 and +100.  Therefore, a move that takes the Index outside this range indicates unusual strength or weakness that can be a prelude to an extended move. Think of these levels as indicating a bullish or bearish bias. Some consider the CCI to be favoring the bulls when above zero and the bears when it is below zero.  The problem with this is that depending only on a cross of the zero line to determine a bullish or bearish disposition can subject a person to many whipsaws.   Requiring a move above +100 for a bullish signal and a move below -100 for a bearish signal will reduce whipsaws but result in slower entries and exits.  Many traders consider this to be a small price to pay for a higher probability of being on the right side of a trade.     There is much more to the CCI than this. The CCI is a powerful analytical tool. For a much more thorough discussion of the CCI (trading with it, signals, and interpretations), see Tutorial 13.
   Back to charts

McClellan Oscillator & Summation Index

     The McClellan Oscillator is a breadth-of-market indicator that is effective for interpreting short-to-intermediate-term market moves. The McClellan Summation Index 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. The readings posted depend on the precise time the readings were taken. For example, after the market officially closes, stock prices may continue changing by small amounts for a short time as computer systems catch up with closing activity. Readings at the official closing time may be slightly different from those 15 minutes after the close. Thus, different sources may report slightly different readings.
     McClellan Oscillator readings of ±150 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.
     The Summation Index is a relative number, depending on the day when the count begins. Therefore, on one day it might read 10,000 and the next day it might read 9,000 even though the chart shows the Index rising. In this case, the apparent discrepancy would simply be the result of the summation starting on a later day for the chart selected. You can get a better sense of what is going on by simply looking at the chart. Ask yourself questions like the following. Is the Summation Index rising or falling? Are the postings far apart or close together? For example, 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.      
     The above charts may take on a different appearance at times. That's because we use several sources, and when one is late in getting the data out we may switch to another source. Some charts have the numbers 19 and 39 at the top. Those are simply the exponential moving averages used in the computations, and should be ignored.  Back to charts


Chaikin Relative Volatility and CBOE Volatility Index (VIX)
We lack the data to update Chaikin Volatility.  The VIX is at 14.26 (Friday's Close).  The charts are not updated.
Chaiken Volatility Indicator and the Volatility Index

The Chaikin Volatility Indicator is shown above on the left.  It is based on the S&P100.  This 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 increased 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. Chaikin  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 VIX (shown above on the right) is a measurement of "implied risk" and differs from the other measurement 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). 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. 

We Test Common Assumptions Of Market Participants

pppWe test assumptions commonly made by market "gurus" to see if they are valid.  On the Q & A page (item 14 )) , 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/investors, prefer exponential moving averages over simple moving averages. It is part of the "popular wisdom" of the market that exponential averages are better than simple averages because of the greater sensitivity of exponential moving averages to the most recent price behavior. However, few have really conducted more than superficial tests of the assumption that exponential is better than simple. 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 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 actually given, and that often results in fewer whipsaws or false signals. Please do not get the wrong impression. Generally, the differences were not major, and sometimes exponential averages worked better. However, we were trying to determine which worked best most of the time on most stocks in most types of market environment. Our general observation is that 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. For more on the nature of our testing procedures, see our report on selling strategies (a link at the end of the report leads to a report on the Merrill Lynch study). Sell Strategy See also Item #11 at Q & A


Gold  & Silver Spot Prices
The spot prices displayed represent the midpoint between Monex bid and ask bullion prices per ounce.
3-Month Chart Spot Gold
800

Quotes For Gold & Silver
Today's Action & Last Spot Bid Prices
Current Spot Bid Prices For Gold Current Spot Bid Prices For Silver


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