Simple Indicators
As their name suggests, this is the simplest, but not least effective, group of market indicators that we publish. Currently, there are 160 simple indicators, which cover all 32 of the stock indices that we track. These are:
- Dow Jones Industrial Average
- S&P 500
- Nasdaq Composite
- NYSE Composite
- Nasdaq 100
- S&P 100
- S&P TSX Composite
- FTSE 100
- DAX
- CAC 40
- BEL-20 Brussels
- MIBTEL Italy
- IGBM Madrid General
- SSMI Swiss Market
- ATX Austria
- AEX Amsterdam
- OMX Stockholm All Share
- OSE Oslo All-Share
- Nikkei 225
- Hang Seng
- All Ordinaries
- Straits Times Index
- KOSPI Composite
- Shanghai Composite
- Taiwan Weighted
- Bombay Sensex
- KLSE Composite
- Jakarta Composite
- NZSE 50
- IPC Mexico
- BOVESPA Brazil
- MERVAL Argentina
The simple indicators, or R-series as we like to call them, are calculated by dividing the closing value of the stock index by the average closing value over the previous X number of days (the period). This type of average is called a 'Moving Average' because it is calculated for time series data, which stock index prices are an example of.
As an example, let us consider the Nasdaq Relative to 50-Day Moving Average (Nasdaq R50). The value for the Nasdaq R50 today is simply the closing value of the Nasdaq divided by the average closing value over the last 50 days. Generally, good buying opportunities begin to appear when the indicator is at a relatively low level.
So, which period should you choose? The answer is simple. Shorter periods, such as 5 or 10 days, are suitable for short term trading strategies and longer periods, such as 50 or 200 days are suitable for longer term trading strategies. On the chart, you'll find that it is much better to plot short periods over a shorter range, such as 6 months.
