This is why I track the percentage of stocks above the 50-day moving average
If you have visited General market overview page Or after looking at my chart annotation page for a while, you have seen it Percentage of stocks above the 50-day moving average indicator.
I love Use it as an oversold indicator during market sell-offs. I first learned about it through Worden’s software in the early 2000s—they have an indicator called T2108, which is New York Stock Exchange Higher than their stocks 40-Daily moving average. When I built this website, I wanted something similar, so I chose the indicators you see on the general market overview page. The difference is that my stock considers all stocks (not just NYSE stocks) and uses a 50-day moving average. But they are telling the same story. That is, Once the percentage drops to or below 20, the market is oversold and a short-term rebound may occur in the near future.
An old stock blogger partner, Chris, posted the following chart on Twitter yesterday, A good illustration of this phenomenon.This shows the S&P 500 index weekly chart relative to Standard & Poor’s 500 Index Stocks Above its 50-day moving average. (Click on the picture to see the big picture)
Chris pointed out the indicator:
It closed at 18.2 on Friday and 13.6 on Thursday, the lowest points of 9.0 and 11.8 since January 20 to January 21, 2016. Below 20 is cumulative, below 10 is oversold (buy)
The decline around October 2009 shows that This is not some magic indicator, it can guarantee that the bottom has been put in. (But it does show that you may be wrong to place a bearish bet when the indicator is below 20-unless you are making a very short-term trade). Like, I said, I like to use it as a warning near the short-term bottom.and so When I see that the indicator is close to or below 20, I may cover or tighten the stop loss of any short position and may start to buy the list.
My friend Dr. Dulu is A loyal fan of T2108 with Write it often. This is his latest news yesterday: Above 40 (February 9, 2018)-stock market reset Where he pointed out T2108 “dropped to 8.6% and closed at 14.6%” last week.
So I think these are good indicators to keep in your pocket during the “horrible” period. I don’t like to use these types of indicators as overbought warnings, because overbought seems to remain overbought for so long, especially in a bull market. I did find it Although it’s interesting as a breadth indicator. I never like to see the market hit new highs and the percentage of stocks above the X moving average fall behind.