I’m breaking down and doing a stereotypical trading post today. Since I brought up the necessity of keeping market information simple and consistent in the intuitive trading series I thought I’d give an example, and yesterday’s chart is more interesting than most. This is what I look at each day (along with an equivalent chart for the NYSE):
Top to bottom the indicators are: volume, a breadth oscillator, cumulative breadth – based on the same formula, AD indecision (similar to the Fosback Absolute Breadth Index), and breadth efficiency (similar to McGinley’s AD Power). There are also a handful of the hundreds of systems I mentioned in the intuitive trading series shown, though I truly have no idea what they are on this chart.
What’s notable about the chart at the moment is the bottom two indicators. Indecision is typically very low at a bottom as breadth becomes more lopsided, and breadth efficiency is typically very high as buyers retreat and cause large percentage moves. Neither is the case here, which could mean the fat lady will only stick her head out to clear her throat before turning around and heading backstage for a drink.
For a very comprehensive guide to breadth indicators, see The Complete Guide to Market Breadth Indicators: How to Analyze and Evaluate market Direction and Strength
Disclaimer: Nothing in this post or blog is intended as specific investment advice, recommendation, or inducement to buy or sell anything. It is my opinion only, and as such is something not intended for any particular individual and something even I rarely give any credence. If, despite this, you or your attorney believe this constitutes investment advice or any other actionable category, immediately stop reading this blog, read my About page, review the idea of a reasonable man standard, and reconsider. If the notion persists reduce your intake of recreational drugs until it passes and you can resume acting like a responsible adult.