Info!! Ask Together With Supply: A Await At Bullish Together With Bearish Stock Marketplace Momentum

If you lot click on the chart, you'll come across a 60-minute rendering of the S&P 500 e-mini (ES) futures. Note the numbers higher upwards each appointment inwards blue. The top publish is Demand (a proprietary index of the publish of NYSE, NASDAQ, in addition to ASE stocks closing higher upwards the volatility envelopes surrounding their short-term moving averages); the bottom publish is Supply (an index of the publish of stocks closing below their volatility envelopes). I brand this numbers available each morn prior to the marketplace position opened upwards via Twitter; you tin follow the tweets here.

Demand/Supply acts every bit a momentum indicator. During the early on component subdivision of a short-term uptrend, many stocks volition unopen higher upwards their envelopes. As the rally loses steam, we'll come across momentum wane, though Demand volition withal transcend Supply. Once nosotros laid out to top out, we'll come across Supply describe ahead of Demand in addition to relatively depression Demand in addition to Supply numbers, every bit few stocks present pregnant momentum. As the bears accept charge, we'll therefore come across the early on component subdivision of a short-term downtrend in addition to many stocks volition unopen below their envelopes. The turn down volition lose steam every bit momentum wanes, though Supply volition withal transcend Demand. Then nosotros offset the cycle all over again.

Note how the downside momentum petered out to a greater extent than or less the 23rd of June, leading to rigid upside momentum on the 25th in addition to 26th. We therefore began to lose momentum, in addition to yesterday's turn down started us on the high momentum side of a short-term decline.

As you lot would expect, inwards longer-term uptrends, we'll come across Demand peaks at higher highs in addition to Supply peaks at higher lows. In longer-term downtrends, we'll come across the reverse. In hit markets, we'll come across the peaks in addition to valleys inwards Demand in addition to Supply plough over at like high in addition to depression cost levels, respectively. As a rule, higher cost highs in addition to lower cost lows that plough over on weaker Demand or Supply are to a greater extent than vulnerable to reversal than higher highs in addition to lower lows that plough over on expanded upside or downside momentum.

By tracking these numbers daily via Twitter, you lot tin gain a experience for whether a marketplace position is accelerating inwards a trend, decelerating, or stalled out. That's useful inwards anticipating scenarios for the side yesteryear side day's trade. Should nosotros come across downside momentum wane at or higher upwards the June lows on the chart, that would furnish us alongside a rigid indication of a hit marketplace position (and ready us upwards for an eventual purchase every bit momentum turns to the bull side). Continued high levels of Supply at cost levels that accept out the June lows on the nautical chart would clearly give us a longer-term bearish trend--and to a greater extent than serious correction to the bull market.
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