Info!! A Unique Mode Of Tracking Marketplace Pull As Well As Weakness

Above nosotros run into a cumulative running full of the number of NYSE stocks closing inwards a higher house their upper Bollinger Bands minus the number closing below their lower bands.  (Data from the Stock Charts site).  This is an interesting measure, because it tells us how many issues are distinctively rigid versus weak.  The gradient of the cumulative business is every bit of import every bit the direction, every bit it gives us a feel for the breadth of marketplace forcefulness or weakness.  Note the anemic bounce inwards the cumulative business since the election lows.  This reflects the real mixed breadth of the marketplace rise--some sectors quite strong, others distinctively weak.  Still, the business has been consistently rising, reflecting relatively niggling weakness with stocks.  For example, the by 2 days we've seen 95 too 103 stocks closed inwards a higher house their respective bands, but solely five too nine stocks closed below their lower bands.  In general, to larn out a sustained marketplace decline, nosotros involve to run into non simply a reduction inwards marketplace strength, but an expansion of weakness.  

The absence of weakness real oft is a useful predictor of hereafter marketplace strength.  For example, when the number of stocks below their Bollinger Bands has been inwards its lowest quartile since 2004 (little weakness), the adjacent xx days inwards SPY average a hit of +.95%.  When the number of stocks below their bands has been inwards their highest quartile (great weakness), the adjacent xx days bring averaged a hit of +.70%.  All other occasions bring averaged a 20-day hit of solely +.21%.  It's a prissy event of how too thence much inwards the agency of marketplace returns comes from the relative extremes of momentum too value.

Further Reading:  Momentum, Value, too Short-Term Market Movement
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