Skip to main content

Market statistics show a glimmer of hope

On a weekly basis I scan all the stocks and ETFs on the NYSE, NASDAQ and AMEX, over 7000 securities in all.

In addition to looking for individual buy and sell signals (see Alert HQ) I have started to capture some overall statistics for the market as a whole.

For the most part, stocks are not in such great shape. Here are some numbers on the moving averages that we calculate:
  • 42% of stocks are above their 20-day exponential moving average while 58% are below their 20-day EMA
  • 36% are above their 50-day exponential moving average while 64% are below their 50-day EMA
  • The 20-day EMA has crossed above the 50-day EMA for 33% of the stocks we tested while 67% have seen a negative crossover.
On the plus side, the Aroon indicators that we calculate show recent strong up-trends for 27% of the stocks we tested and recent strong down-trends for only 17%. The remainder are either not displaying a trend at all or are only exhibiting weaker trends.

The good news

With Aroon(up) signals outnumbering Aroon(down) signals and and almost half of stocks trading above their 20-day moving averages, perhaps we are seeing the beginnings of a bottom.

If stocks are actually beginning to slow their fall and begin to turn up, these shorter-term indicators are the ones we would expect to see turning positive first.

The bad news

On the other hand, we still have the majority of stocks below their 50-day MAs and two thirds have had bearish crossovers of the 20-day and 50-day. These two situations when taken together are generally considered to be seriously bearish. This implies that the glimmer of a rally we are seeing has a way to go before it can reverse these negative indications.

A sustained rally will have to include more than a minority of stocks. What we are seeing so far is hopeful but it is clear that the majority of stocks are still in trouble. Indeed, we may only be seeing what typically happens in a bear market rally.

Postscript

I intend to collect these statistics every week and will begin reporting on them regularly. As I collect more data, I will begin to present charts, as well. Hopefully, this will provide us some insights into market activity.

For those who are unfamiliar with the Aroon indicator system, this explanation at StockCharts.com provides a good introduction and overview.

Comments

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position. This first post in the series starts at the beginning: getting good investment ideas. Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets. As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professional