My broad market analytical approach is comprised of three main steps: Price, Breadth and Sentiment.
First off is price. If you ask me what chart I would look at to get a read on the S&P 500 index, my answer would be a chart of the price of the S&P 500 index! Price is king.
Second to that is breadth, which answers the question of what is happening with the hundreds of stocks that actually make up this index. Are the individual names mirroring the action of the benchmark, or are certain names diverging from the broader trend?
Today’s chart shows the S&P 500 for the last five years along with two key breadth indicators based on moving averages. The first panel below the price shows the percent of stocks in the S&P trading above their 200-day moving average, and the bottom panel represents the percent of S&P members trading above their 50-day moving average.
You can read more over at seeitmarket.com.
RR#6,
Dave
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. Please see the Disclaimer page for full details.