Tuesday, August 21, 2007

NYSE Composite With % Stocks Above 40 Moving Average

(click to enlarge)

This chart shows the NYSE Composite Index weekly chart with a 50 week moving average(green line). In the top part of the chart is an indicator that shows the percentage of stocks trading above their respective 40day moving averages. This indicator has proven to be a great signal in the past. In 2003 it showed a great divergence at the low. This is the type of pattern that needs to form for this market to gain any solid footing. Don't look for this to happen in the form of a "V" bottom. It takes time to work of the stress off the last few weeks. If, and it's a big if, the market can hold it's 50week moving average, then in later weeks this pattern will form. There is no reward for being the first one to jump in the pool, especially if there isn't enough water there when you jump. Patience is rewarded!

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