(This post was last modified: 2018-07-08, 09:28 AM by malaguti.)
RE: Major US Stock Indexes Update - NYSE, Nasdaq, S&P 500, DJIA & S&P 600 small caps
(2018-07-08, 01:04 AM)isatrader Wrote:(2018-07-08, 12:17 AM)malaguti Wrote: Interesting analysis for stage 3 on SPY
30sma is rising. no lows taken out and rising higher lows, just no higher highs
The price action on the index chart is only one part of the story for analysing the Stage. The breadth data such as the Bullish Percent and moving average breadth that you can see below the chart gives much more context for anlaysing the Stages and are leading indicators, whereas the index itself is a lagging indicator due it being an average of the stocks. So I give the market breadth data much more weight for analysing the Stages of the indexes as you have make decisions at the right edge of the chart, and not in hindsight.
For me the initial move into Stage 3A in the S&P 500 began in the February breakdown, and was then confirmed by the lower higher put in in March which then price action made a lower weekly close than the February weekly close, and closed below the 30 week MA, which also turned down briefly, and then flattened out, and is now turning up again. However, the price has yet to close back above that March lower high, and has tested the lows and highs of the range once already. So for me it's a clear Stage 3 range, but people are free to disagree, it's only my interpretation of the data.
However, I do think that there's a common misconception around Stage 3 due it's definition in the book as the top area. I think that is true in a lot of cases, however, it would better if it was simply defined as a significant period of distribution, as often it's only a prelonged, but sometimes volatile consolidation phase following a Stage 2 advance that then continues higher back into Stage 2 again.
Interesting, thanks for the reply.Â
I guess I liken it to the action on the small caps $SML where the breadth data may have been signalling trouble, yet the chart itself was forming a triple top breakout and is now powering ahead once more. not suggesting the s&P will do the same, or even not, only time can tell, but the "period of consolidation" is indeed there for all to see
presumably you wouldnt have called $SML as 3
not trying to be facetious, just getting back into stage analysis and interesting to be able to get this debate after so long!
I'm attaching an old chart of MMM back in 2005 where Stan has published his global trend alert where this was ranked as a stage 2BÂ
I'll be interested to pull up some of his others. anyway as you say, it is a subjective matter