{"id":2616,"date":"2010-01-26T15:17:25","date_gmt":"2010-01-26T20:17:25","guid":{"rendered":"http:\/\/leavittbrothers.com\/blog\/?p=2616"},"modified":"2010-01-26T15:17:25","modified_gmt":"2010-01-26T20:17:25","slug":"short-term-breadth-indicators","status":"publish","type":"post","link":"https:\/\/blog.leavittbrothers.com\/?p=2616","title":{"rendered":"Short Term Breadth Indicators"},"content":{"rendered":"

For those of you who’ve followed my work for any length of time know I prefer breadth indicators over technical indicators, ergo I prefer the % of stocks trading above a certain MA over MACD. <\/span>
\nLet’s do a run down of two short term S&P 500, Nasdaq 100 and NYSE breadth indicators.
\n<\/span>
\nThe S&P 500<\/strong><\/span>
\nSPX (black) vs % of Stocks Trading Above Their 10-day MA (green):<\/strong> The correlation between a low reading from the % and the SPX can’t be denied or ignored. Each time the % dropped to two standard deviations below its mean (beginning of Sept, beginning of Oct, end of Oct), the market bottomed and moved up almost 10% before resting. The % hit this oversold reading Friday, but given the late-Oct activity, we need to be open to a mini double dip.<\/span>
\n\"\"
\nSPX (black) vs. Distance the SPX is From its 10-day MA (blue):<\/strong> The theory here is each time the underlying index gets “too” extended from its moving average, a regression to the mean is likely to follow. In the chart below, each time the S&P dropped to around one standard deviation from its mean (~ 0.98 on the left axis) the S&P bottomed and bounce. Study the chart. There are many instances of this going back to the Mar low.<\/span>
\n\"\"
\nThe NYSE<\/strong><\/span>
\nNYSE (black) vs % of Stocks Trading Above Their 10-day MA (green):<\/strong> The green line here is almost identical to the one above. Each time the % of NYSE stocks above their 10-day MA fell two standard deviations below the mean, a sizable and playable bounce followed soon after.<\/span>
\n\"\"
\nNYSE (black) vs. Distance the NYSE is From its 10-day MA (blue):<\/strong> Similar story here except one standard deviation is less meaningful. Each time the green line bottomed, the NYSE was finished selling off and a new mini leg up began.<\/span>
\n\"\"
\nThe Nasdaq 100<\/strong><\/span>
\nNDX (black) vs % of Stocks Trading Above Their 10-day MA (green):<\/strong> Ditto here. Within an uptrend, the mean % of stocks above their 10-day MA is around 60, and two standard deviations below the mean (around 10) seems to be a key level.<\/span>
\n\"\"
\nNDX (black) vs. Distance the NDX is From its 10-day MA (blue):<\/strong> Same story here. The bottoms of the green line match up very closely with the bottoms of the NDX.<\/span>
\n\"\"
\nConclusion:<\/strong> The sum of these charts tell us, on a short term basis, the market is oversold and due for a bounce (not just a dead cat bounce, a real bounce). But I don’t want to pinpoint a bottom, I don’t want to be that exact. The market is too complex to expect it to act accordingly on a specific day, so I’ll generally say a bottom, or a double dip bottom, should take place in the next couple days. Failure to materialize may suggest a change in character is underway.<\/span>
\n<\/p>\n","protected":false},"excerpt":{"rendered":"

For those of you who’ve followed my work for any length of time know I prefer breadth indicators over technical indicators, ergo I prefer the % of stocks trading above a certain MA over MACD. Let’s do a run down of two short term S&P 500, Nasdaq 100 and NYSE breadth indicators.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/2616"}],"collection":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2616"}],"version-history":[{"count":0,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/2616\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}