[isatrader]

isa you mention the weight of evidence and the % of stocks in stage 3 and 4 being larger than 1 and 2. Can you point me to that? I would like to follow that for sure and think I overlooked it, or is it presented as something else?

Jim nailed it in his reply above. The long and medium term Percentage of stocks above their 200 Day and 150 Day Moving Average charts are the first port of call for doing the gallop poll of the US market, and Stan has been quoted as saying that they are around 80% in line with his proprietary Stages survey. But obviously the market is much bigger these days, so I include the Nasdaq Percentage of stocks above their 200 Day and 150 Day Moving Average charts as well, and so those markets combined covers around 4500+ US stocks. So when the overall balance of those is below 50% and on bear confirmed signals on the P&F charts that make them up, it highlights the weakness under the surface that may not be visible in the indexes themselves at the time.

These, as well as the slower moving Bullish Percent Indexes are the core tools for gauging risk in the market and producing the quick gallop poll that Stan mentions in the book.

It may have only been a footnote to a chart. But I think it's the single most useful piece of information in the book.

So I highlight these charts and various other market breadth charts in the Market Breadth Extra thread, and as I said we started to get initial sell signals appearing in early June in the moving average breadth charts and the cumulative advance decline charts here: http://stageanalysis.net/forum/showthrea...28#pid9028 and then the cumulative new highs - new lows also started to breakdown in early July and then we saw the NYSE Bullish percent Index moved to Bear Confirmed on July 26th with the Percentage of stocks above their 200 Day and 150 Day Moving Average charts showing further deterioration and both below the 40% level at that point. Hence, you could see from that quick snapshot that the majority of stocks were in Stage 3 and 4, as only 34% were trading above their 150 day (30 week) moving averages.

I hope that helps. Market Breadth is an extensive subject on it own, but an integral part of the method. So, I think as long as you follow the Weight of Evidence approach that Stan suggests, then it will help you gauge risk much better.