ajtj99's Market Pulse

[Koikaze]

This page contains explanations and descriptions for "LOOKING BACK" reports. Each report will carry a link to this page so those interested can gain a clearer understanding of the data reported. The reports attempt to provide a clear look at the current state of the market. (Updated 07/13/04, flg)

07/13/04, dropped the 10 INDICATORS, CUM RANGE, STRENGTH


EXPLANATIONS AND DESCRIPTIONS

OPTIMISM reflects my opinion of the market for the next several days. It is derived from the price action of approximately 7,000 stocks. It is an indicator, and, as such, may be wrong. Rising readings suggest the market will rise (or a falling market will stabilize). Falling readings suggest the market will fall (or a rising market will weaken).

Positive values are considered bullish and negative values bearish, but the values give no indication of the strength or duration of a move. Since negative optimism is a contradiction in terms, negative values should be labelled PESSIMISM, but I have no plans to change the label. The value of the OPTIMISM reading is probably less important than its recent trend. Extreme readings lead to ALERTs.

ALERTs are flags to warn of possible market surges or drops, and can occur on successive days. They make no pretense of predicting the direction or even the certainty of the move. They merely give a warning that a move is possible. ALERTs are triggered by excesses in the OPTIMISM index. The most recent alerts (as of this writing) were a series of 6 from May 26th through June 2nd, which seemed to correlate with a drop in the market between June 7th and June 21st.

VOLUME FACTOR is the daily volume on the NYSE and NASD (I ignore AMEX and OTC) in 1,000's, divided by 5,000,000. The 5 million is an arbitrary number. The volume factor is each day's volume as a percentage of 5 million and is used to relate one day's volume to another. The volume factor is applied to COMPOSITE (below)

PUT/CALL RATIO uses Zeev's method of excluding the QQQ's.

COMPOSITE is a combination of ten sets of numbers I've been accumulating for a year or so. They include the number of NYSE and NASD issues above/below their 10-DMA, a couple that rate the the number of 209 Media General Stock Groups as bullish/bearish in different ways, and several that are generated using Worden Brothers software. The sets have different degrees of latency because some use 30-days and other 45-days of data. They are "normalized" (in terms of each other, not in terms of latency) by applying a factor to each set and then combining them. I only have data since last July 23rd, but the chart it produces seems to give a good picture of where the market's been.

VXN and VXO: show the current value and a weighted average of the most recent 5 days.

Most of the other individual items (DIA, QQQ, NASDAQ, DJ-30, etc.) have a POWER rating. POWER is an indication of how an item is doing in relation to its recent history (about 40 days).

SUMMARY OF IMPRESSIONS FROM "LOOKING BACK" consists of notes on ideas that strike me as I make the report. I leave the old notes for about a week, for reference.

Fred