Free charts and backtesting of over 500 stock market indicators, including breadth, put/call ratios and volatility

Market Commentary »

Some of the most profitable trading strategies depend on correctly predicting price reversals. Luckily, there are plenty of statistical tools to help us anticipate these reversals with reasonable objectivity. The market this week, however, did not lend itself to such analysis.

Price reversals are more likely to happen when breadth indicators are registering extreme readings in more than one time-frame. For example, when the percentages of S&P 500 stocks above their 5, 10 and 20-day moving averages are at least 1-standard deviation above (or below) their 1-year averages, we can expect a short-term decline (or rally). But, this is not the case today, as the aforementioned indicators are only slightly above their 1-year averages, which is not very useful for a reversal play.

However, one can say that there has been a slight upward bias in market momentum as a result of the bounce off the January lows, and there are no signs yet that this has ended.

Percentages of S&P 500 Stocks Above 5, 10 and 20-Day Moving Averages


Both comments and pings are currently closed.

Comments are closed.

Select a Stock Index:  VS Indicator:   Indicator Smoothing:  Range:  Theme: