Indicator 8: International Markets

When gauging the weekly market breadth, it is important to include a view outside of the United States. The Global Dow is reviewed to see if it is moving in the same direction as the Dow, NYSE, Nasdaq and SPY indexes.  I take a weekly view and see if it is above or below its 30 week moving average, and to see if it is moving in the same direction as the US Markets. As of this post, the Global Dow continues to struggle. It has been below its 30 week moving average for months, and, the moving average line is sloping down. Both are bear signals.

Links:

• Wikipedia Global Dow explanation
• Stockcharts GDOW chart

Weekly Market Update: Some minor improvement but market remains mixed

This was a short week on the stock market with the Christmas holiday. The indicators are showing some small improvements, however, it is just a nudge and is not necessarily a positive sign. The market needs to play its hand for a couple of more weeks before we will get any real sense of direction.

Major Indexes Above their 30 Week Moving Averages

• Dow Up
• S&P Up
• NasDaq

Dow and the NYSE A-D line both positive for the week

NYSE close touched just below the 200 day moving average.

NYSE 52 week Highs are still lower than the 52 week Lows. This shows continued weakness in the market.

NYSE 52 Week High Low vs. Dow are converging in the upward direction.

Global Dow (GDOW) remains well below its 30 week moving average.

Dow price to dividend ratio remains extremely overvalued.

Broad Market Indicator #7: NYSE 52 Week High Low vs. Dow

Building on the post about the NYSE 52 Week Highs/Lows indicator, I will explain why it’s helpful to gauge it against the Dow’s closing numbers each week. This is a simple but effective tool. If the NYSE 52 Week H-L is divergent from the direction of the Dow then we can see signs of a possible change coming. 

This year this gauge flashed a strong indication in the spring. This is where we start to see back to back weeks of negative divergence on the NYSE 52 week H-L even though the Dow was experiencing gains. News at this time was also positive.

I like to create my own charts. See below for an example of the Dow moving higher (green line on top chart) vs. the NYSE 52 week high-low trending lower (red line on bottom chart).

If we examine the current chart from last Friday (Dec 17, 2015) we can see that both the Dow and the NYSE 52 week highs and lows are in negative territory. The Dow is below its 30 week moving average and the NYSE 52 week Hi Low Differential shows the index has more new lows than highs for the last 3 weeks. When the two indicators flash a negative sign, that is worth paying attention to as well. We are in bear land for now.

Weekly Update: Dec 17 2015 Market Remains in the Doldrums

Even though the market reacted positively to this week's Fed announcement to raise rates, it quickly reversed back into negative trend territory. 

If we look at my chart plotting the weekly indicator it's easier to see the overall trend. We've only had two weeks above the 50% line.  The next two weeks are holiday weeks and some of the market activity will be mutual fund 'window dressing', so we will wait through December to see what January brings.

Broad Market Indicator #6: NYSE 52 Week Highs and Lows

The NYSE 52 week new highs vs. new lows data is helpful is seeing how stocks are measuring up on a weekly basis. This indicator should not be used by itself, but it is a helpful tool to see if there is a trend. Weeks of above or below zero (0) indicate a shift.  On this chart, you can see if began to break down in June and just recently peaked up over the line for the first time in 15 weeks.

Barron’s has great source data if you want to chart it yourself.

Broad Market Indicator #5: NYSE A-D 200 Day Moving Average

For this indicator, we look to see if the NYSE Advance-Decline (A-D) is above or below its 200 day moving average. The divergence between the advances and declines is plotted on a chart, and the 200 day moving average is also plotted. Here is what we are looking for:

• Crossing the 200 MA line (above or below) is the most important signal
• The longer the period before the 200 MA line is crossed, the more meaningful the move.
• Most significant moves are made when there is a change in direction from a long-term pattern. Hovering around zero (0) is not significant.
• Bearish signal: A switch from a long-term positive (above the 200 MA) to below the line
• In a Bull Market, the gauge will reach its peak before the Dow (DJIA) reaches its peak.

Let’s take a look at the indicator. If you look at the chart below from Stockcharts.com, the peak for the NYSE A-D was in April. The Dow peaked a month later in May. The interesting thing to note now is that the A-D line has just touched its 200 day ma line. Let’s see if it can break through.

Data Sources:

• Stockcharts using their $NYAD symbol. Look the chart above for the settings I used.
• McClellon Oscillator Site
• New York Stock Exchange NYSE data

Broad Market Indicator #4: NYSE Advance Decline (A-D) Line

The 4th Indicator is a comparison of the movement of the DOW (DJIA) to the Advance-Decline line of the NYSE. The NYSE A-D line measures the number of stocks advancing versus declining on a weekly basis. We are looking to see if the Dow and the NYSE A-D are moving in convergence or divergence. When the DOW goes up but the NYSE A-D line goes down, it is an indication that investors are moving into safer stocks (DOW) as the DOW tends to have blue-chip companies. 

Here is Barron's chart plotting the NYSE against the DOW. I added the red boxes to show where the DOW moved up while the NYSE AD moved down, ominous signs!

You can follow Barron's chart at this link.

You can see the breakdown signal that occurred in August prior to the latest market correction. We will need to wait and see if we are about to go back down again for a period of time.

Broad Market Update: Stormy Weather

This week any positive signals in the market went south.  All of the 9 indicators are now negative. This week saw the S&P, Dow and Nasdaq break their 30 week moving averages. Not a good signal. 

Averages move south

I am out on the sidelines for now.

Broad Market Indicators #1 - #3: 30 Week Moving Average on the Major Indices

What are the broad market indicators? Indicator #1 – #3 looks at the major indexes on a weekly basis to see if the price is above or below the 30 week moving average. The key here is weekly, not daily basis, as this view allows us to see things on a broader macro level.

The Indexes vs. the 30 Week MA indicator started to flash warning signs in July and then broke the 30 week moving average in August. They recovered in the beginning of October but are now hovering just above, with the exception of the Global Dow which is well underneath the moving average.

Weekly Update: Markets signal downtrend

Three of the nine indicators are in the red this week signaling weakness in the recent market improvements.

Bull Indicators: S&P, NasDaq and Dow are all above their 30 week moving averages.

Bear Indicators: NYSE A-D trending down, more 52 week lows than highs, Global Dow is well below its 30 week moving average, and the Dow showed strength while the NYSE showed weakness in the A-D and 52 week highs.