Maybe its just the beginning... I am examining the market breadth by subtracting the number of NYSE stocks making new highs from the stocks making new lows, the study points to a potential major reversal could be at hand...
If for example:
-500 stocks making new highs and only 20 stocks making new lows then we will get a 480 stocks sum, and there for the index will spike higher
-Oppositely, if only 20 stocks making new highs while 500 stocks making new lows, then we will -480 sum, and the index spikes lower.
This is a clear indicator of the internal strength of market.
So if we add a tool to gauge the behavior of this index, and spot instances where the index deviates substantially from its mean, that might give us valuable information. Therefore, I added a 52-week Bollinger bands, with 3 standard deviation. Three STD means that the upper and lower bands deviates 3 times from the mid band (the 52-week average). Note that the possibility moving 3STD from the mean is very low.
That resulted in a very interesting indicator... Where instances of up and downside spikes out of the bands hinted extreme cases and potential key turning points. The interpretation of these spikes depends mainly on the prior price trend, please see the different cases I plotted on chart in numerical order.
I believe this is a very valuable indicator, and am happy and satisfied to share with you, where If you like it... Give a thumbs up and share it..
Comments are welcomed..
Best of Luck , join me at twitter.com/thefxchannel
Also at my Facebook page www.thefxchannel.com
My best regards,
Technician
If for example:
-500 stocks making new highs and only 20 stocks making new lows then we will get a 480 stocks sum, and there for the index will spike higher
-Oppositely, if only 20 stocks making new highs while 500 stocks making new lows, then we will -480 sum, and the index spikes lower.
This is a clear indicator of the internal strength of market.
So if we add a tool to gauge the behavior of this index, and spot instances where the index deviates substantially from its mean, that might give us valuable information. Therefore, I added a 52-week Bollinger bands, with 3 standard deviation. Three STD means that the upper and lower bands deviates 3 times from the mid band (the 52-week average). Note that the possibility moving 3STD from the mean is very low.
That resulted in a very interesting indicator... Where instances of up and downside spikes out of the bands hinted extreme cases and potential key turning points. The interpretation of these spikes depends mainly on the prior price trend, please see the different cases I plotted on chart in numerical order.
I believe this is a very valuable indicator, and am happy and satisfied to share with you, where If you like it... Give a thumbs up and share it..
Comments are welcomed..
Best of Luck , join me at twitter.com/thefxchannel
Also at my Facebook page www.thefxchannel.com
My best regards,
Technician
