Custom Search

Market Indicators

High-Low Differential Index

Like the advance-decline line, the high-low indicators produce signals when they diverge from the action of the indices like the Dow Jones or the S&P 500. It is considered unhealthy for the market climate if the indices make new highs without many stocks reaching new highs at the same time. Chart technicians use various methods to spot divergences from the major market indices.

The High-Low Differential Index produces good longer term signals when it diverges from the action of the Dow over a prolonged period of time. Daily or weekly data may be used and the calculation of this indicator is very simple; just subtract the daily or weekly new lows from the new highs to get the differential and apply a moving average to smooth out the swings. If you have 479 new highs and 31 new lows on your first week, the reading of your newly created weekly High-Low Differential Index would be 448 (example below).

High-Low Ratio

The High-Low Ratio is the number of new highs divided by the numbers of new lows. Daily or weekly data may be used in the calculation. Readings do get sometimes very distorted if there are for instance about 600 new highs and 5 new lows or vice versa. A long-period moving average should therefore be applied.

Global Futures High-Low Index

This indicator is calculated by dividing the weekly number of highs and lows by the number of total issues traded. A 10-week moving average is applied to smooth out the swings. Like the advance-decline line, this indicator produces signals when it diverges from the action of the indices like the Dow Jones or the S&P 500. It is considered unhealthy for the market climate if the indices make new highs without many stocks reaching new highs at the same time.

Global Futures Bottom Indicator

The Global Futures Bottom Indicator was developed by R. Koch of Wall Street Courier. To our knowledge there is no previous mentioning of this indicator in any financial publication. It does not appear very often but it is extremely reliable when the market is at a turning point. It prevents long-term investors from buying at the wrong time and works especially well for option traders because of its incredibly perfect timing. Unfortunately this indicator does not tell you when to sell. Set yourself a limit if you trade options, or use trailing stop-loss orders if you are a long-term investor.

Check BARRON`S every Monday for the weekly:

• CALLS ADVANCES

• CALLS DECLINES

• PUTS ADVANCES

• PUTS DECLINES

• (CBOE MARKET REPORT)

It takes you only five minutes every week to calculate the Global Futures Bottom Indicator:

• Divide the number of calls advancing by the number of calls declining

• Divide the number of puts declining by the number of puts advancing

• Subtract the result of calls adv./decl. from the result of puts decl./adv.

• Plot the difference on a chart and ignore the decimal.

Any zero or minus reading indicates a bottom. Since this indicator was invented and developed it only failed twice on a minus reading if compared to the Dow Jones. This was due to panic selling on August 3rd and August 24th 1990 when Saddam invaded Kuwait.

• Readings between 1 and 5 are also very reliable and indicate intermediate bottoms in bull markets.

• Readings up to 25 may work but should be counterchecked with other indicators such as the Global Futures Market Timing Indicator.

• Readings above 600 are good breadth indicators and show you that a powerful market move on the upside is to be expected.

• Ignore all other readings.

For your convenience there is a track record attached (377 kb) back to 1985 for you to check the value of this indicator. Plot the numbers on a chart and compare it with previous market action. Feel free to make use of our indicator if you find it useful. Feel also free to publish it as long as you mention the source and call it the Global Futures Bottom Indicator. Download the track record at http://www.wallstreetcourier.com/technician/timing-indicators/track-record.htm

Cycles

Cycle analysis has a long history and is also part of technical analysis. All markets appear to be subject to cyclical patterns and forces caused by economic influences and countless other factors. Stock market movements seem to take place with cyclical regularity and timing your trades to coincide with anticipated cyclical movements can be very rewarding. Wall Street Courier offers some very reliable cycles for subscribers.