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SharePlanner (< 20)

NYSE Reversal Indicator



June 19, 2010 – Comments (2)

Here is the weekly update on the NYSE Reversal Indicator using the advance/decline ratio with a stochastics overlay. The bottom half of the chart is the weekly candles of the S&P. The chart itself goes back almost three years. Some folks have criticized me for posting this chart recently saying that it isn't 100% accurate - but if it was as some think it must be in order to post then 1) I wouldn't be posting it - I'd save it all for myself 2) I would sell it to Goldman Sachs for an ungodly sum of money. But it isn't perfect (I wish it was) and there is always a level of error that you can expect from it. But overall, it is fairly accurate, and when the indicator hits certain extremes on the stochastics, it is often a good time to start hedging positions that are going against the direction of the indicators, or start loading up on short or long positions in respect to the direction that the indicator itself is pointing to.

So no, it is not 100% accurate and you are  fool tho think otherwise. But it is a good indicator of when one should start showing a more bullish/bearish tone when the market reaches those certain extreme levels.

Here is the NYSE Reversal Indicator.

2 Comments – Post Your Own

#1) On June 19, 2010 at 6:06 PM, cthomas1017 (98.34) wrote:

SP!  Last week, I linked over to your website and discovered a brilliant exchange by you and your readers about the accuracy of you indicator.  I'd encourage anyone tempted to take the indicator as infallible, as well as those who accuse you of treating it with infallibility, to click on the link above and read last week's exchange.  It branched, at times, from the original topic, but was - all in all - a very good read about how to take information & data from a number of sources to craft a wise, investment STRATEGY.

Thank you for posting and I, for one, appreciate your continuing to post in the information. :) 

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#2) On June 20, 2010 at 12:06 AM, SharePlanner (< 20) wrote:

Hey CThomas - thanks for the words of encouragement! My goal is to be just another weapon in the arsenal of the trader/investor. You said it well as to use information and data from all around to craft a wise strategy. Won't work 100% of the time, but if the strategy is sound, you'll come out ahead.

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