RE: US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History
(2020-03-01, 05:36 PM)isatrader Wrote:(2020-03-01, 05:19 PM)pcabc Wrote: Regarding the bullish % or % stocks above their MAs. Though you talks about weight of evidence you seem to pay particular heed to these? If so, are you suggesting that if above 70% or below 30% then these indicators should be given more consideration to than other indicators?
From an investor perspective, yes. These do get more weighting than anything else when they reach the end zones at the top and bottom for me. As buy and sell signals from these areas are the strongest, and only happen once every few years or so. So I do favour these above the others as a market timing tool. But are even better when they align with the other breadth charts signals too. But I do think that they are most important as they give you similar insights to the Stages Survey.
You might find the following useful, which was a post on the DWA website back in early 2012 that shows the long term stats for what happens when the NYSE Bullish Percent Index first hits the 70% level on the way up (in this case the S&P 500 topped 56 days later), and their explanation of the Bullish Percent Index, and how it's used.
These are very interesting as indicators as all the simple ways to track other indicators, advance / decline etc will tend to look positive at the end of tops whereas this flags reversal. I think I need to do three things:
1. Pay more attention to my existing indicators, get out of positions or set very tight stops on investor positions if I get a 'Long term sell' indication on my overal breadth scoring system. Perhaps I'll make exceptions for a few trusted positions such as MSFT?
2. In my charts colour where the indicator is above 70% and below 30% to give me a visual clue to pay more attention.
3. Tweak my scoring system. Currently it gives a +1 (bullish) if above 50% and below 70% and -1 bearish if below 50% and above 40%. I ought to do something to include the overbought and oversold zones as they currently score zero.