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Sunday, 11/10/2002 11:21:04 PM

Sunday, November 10, 2002 11:21:04 PM

Post# of 241
USING % NET ADVANCING ISSUES TO FIND BOTTOMS/TOPS

The net of advancing issues, (vs the total issues on the
index), is sometimes said to be useful in predicting trend
changes on the Nasdaq COMP. To test this assertion, I decided
to create some charts, using data from Nasdaq. The problem
though is that the number of issues on the Naz keeps dropping
as the Bear grinds on, thus making longer-term comparisons
suspect. I decided, therefore, to chart the difference between
Percentage of Net Advancing Issues and the Percentage of Net
Declining Issues.

[Note: I titled this post USING % NET ADVANCING ISSUES TO
FIND BOTTOMS/TOPS
, rather than Using the Difference
between Percentage of Net Advancing Issues and the Percentage
of Net Declining Issues TO FIND BOTTOMS/TOPS
because the
latter is more than the eight words iHub allows for a title. {g/ng}

{Caveat: I'm not sure I'm explaining this correctly, and I'm
not really even sure I did the math right, as Stat 1 was a long
time ago. If anybody spots flaws in my procedures, please let
me know.}

Methodology:

1. I downloaded the data from the NASDAQ web site, which is
available in Microsoft Excel format at at
http://marketdata.nasdaq.com/mr4b.html

2. Next, I used Excel to figure the Net advancers for the
years 2001 and 2002. (Unfortunately, the data that Nasdaq
offers is spotty in coverage, and the "unchanged" issues data
is not available from the year 2000, which is why I only went
back through 2001.)

Formula: [Advancers / (Advancers + Decliners + Unchanged)] - [Decliners / (Advancers + Decliners + Unchanged)]

3. I then reformatted the results into percentages, and used
Excel's "Insert Chart" function to create these charts.

What is on these charts?

-- All of the charts include the Nasdaq daily close figures for
the period in question.

-- The first chart overlays each day's net advancers. This
chart is extremely "spikey," so I did a bit more work with the
info and created several more charts. The remaining charts
show the COMP closing numbers with a moving average of Net
Advancers superimposed over it. To keep things simple, (not to
mention readable), each chart shows only a single moving
average. The moving averages covered, in order of appearance,
are 5, 8, 13, and 21 days long.

The $64,000 Question:

What do these charts tell us about the direction of the COMP
over the next few days/weeks/months?

In the near-term, i.e., this coming week, these charts seem to
indicate a correction is coming very soon.

Over a longer term, however, comparing these charts to the
patterns they drew during the April 2000 and post 9/11/2001
rallies seems to hint that this rally is not as dead as many,
(including yours truly), have been assuming.

Opinions anyone?

------------------------------------------------------------

Note: These charts may be rather large, depending on your
screen size and/or resolution, but I think the size is
necessary if one is to make any sense out of all the squiggles.




















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http://www.angelfire.lycos.com/goth/augieboo




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