Jim Van Meerten / BarChart Stock Market Momentum Indicators W/E 9/11/2009 - CODE GREEN
At the close of each week I try to evaluate on Financial Tides the Stock Market's Momentum by looking at some key indicators I've learned to trust that are published on BarChart. I have no crystal ball and I'm not a Technical Analyst that thinks he can interpret the tea leaves and the alignment of the stars and predict the future. I use a common sense approach to see if the Stock Market is trending up or down, determine how strong and how long that trend has continued and cross my fingers it will continue. Sometimes it's good to be in the Market, sometimes it feels better to sit this week out. Let's see what happened this week.
Momentum of the Value Line Index - I use this index because it is a broad based index of about 1700 stocks and covers about 95% of the US Stock Market capitalization
1 - BarChart ranks the Index as a Overall 96% BUY - 12 of the 13 indicators BarChart uses are BUY and only 1 is a HOLD - looks good
2 - The VLA is trending above its 20, 50 and 100 Day Moving Averages (DMA)
BarChart Market Momentum - this week looks at the direction of the 6000 stocks that traded.
1 - 78% of the stocks closed above their 20 DMA
2 - 83% of the stocks closed above their 50 DMA
3 - 88% of the stocks closed above their 100DMAThis is stronger than last week's closings and is positive
The ratio of how many stock hit new highs vs. how many hit new lows - any number above 1.0 is positive, below .99 negative
1 - 20 day ratio - 2222 new highs/ 227 new lows = 9.8 pretty strong
2 - 65 day ratio - 1563 new highs/ 104 new lows = 15.0 very strong
3 - 100 day ratio - 1414 new highs/ 91 new lows = 15.5 very strong
Overall it seems like the Stock Market is trending upward and will continue - A BUY CODE GREEN
NOTE: I've been asked why is use 3 different methods that seem to give parallel information. Good Question - It's because each of these 3 methods has some tracking error in them. Example: In one of the worst weeks in the Market last year there were 26 stocks hitting strong new highs on the AMEX. When I examined closely I found that all 26 were inverse ETFs. By using all 3 methods I hope not to get caught off guard by a tracking error in any one of them.
Remember: This Financial Tides is an instructions site that tries to teach you to trust your experience, knowledge, common sense and a good stock screening tool like BarChart to beat the Market on your own