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Read Current Market Outlook
Dear
Ben,
We are enhancing our services and adding
new studies (indicators) to our charts...
Advance
Decline Line, TRIX, Standard Deviation
Once again, MarketVolume® is one step ahead
of the competition. Right now, our development team put the finishing
touches on our new Indexes charts. MarketVolume® is the only source of
real-time intraday index volume and advance / decline charts for major US
indexes and exchanges. Now, we are raising the bar even further.
From now on you may monitor
Advance Decline Line for U.S. indexes and Exchanges.
Advance Decline Line
Advance Decline Line is one of the
well known breadth indicator in technical analysis. Initially
Advance Decline Line (AD Line) has been applied to NYSE (New York Stock
Exchange), yet, we are the first who started to provide this technical
indicators for other indexes and exchanges which allows to use AD Line to
analyze smaller stock market sectors.
As with all other breadth
indicators AD line could be applied to the basked of stocks only and is
based on the Advance/Decline Issues, however we are the first who started
to apply the Advance Decline Line formula to volume of advances and
declines as well as we are first who started to monitor AD Line on
intraday charts.
Below you may see
the S&P 500 advance decline line and advance decline volume
line.
Chart 1: S&P 500 index - Advance Decline
Line.
![S&P 500 index - Advance Decline Line.]()
TRIX and TRX 2
Line
TRIX displays the percent
rate-of-change of a triple exponentially smoothed moving average of a
security's closing price in order to eliminate price movements that are
insignificant to the larger trends by reducing price
volatility.
Below you may see S&P 500 60-day (1 bar = 1 hour)
chart example of using TRIX indicator in hypothetical trading system that
generates "Buy/Sell Signals" on crossovers of TRIX and zero line around
which TRIX oscillates.
Chart 2: S&P 500 index - TRIX.
![S&P 500 index - TRIX.]()
Another way of using TRIX is to use it with
"Signal Line". On the chart below (see chart #2) you may see example of
TRIX trading system that generates signals on TRIX and "Signal Line"
crossovers.
Chart 3: S&P 500 index - TRIX 2 line (Signal
Line).
![S&P index - TRIX 2 line.]()
If you compare chart #1 to the chart #2, you
may notice that with the same setting the second trading system is more
sensitive and may earlier spot trend reversals. However at the same time
the second trading system would generate more signals and as a result
probability of fake signals is higher. Furthermore depending on the
trading style one trader may prefer using TRIX while other may select TRIX
with "Signal Line".
Standard Deviation
The Standard Deviation is used in
technical analysis and trading systems to measures stock's volatility
statistically by showing the difference of the prices from the average
one. Normally, this indicator is used as a constituent of other
indicators.
One of use of the Standard deviation is to confirm the
down-trend and up-trend. As a rule, during the up-trend the market is less
volatile while during the downtrend and market crashes we may witness high
volatility which is caused by panic selling.
In trading systems
Standard Deviation (as other volatility indicators) is used to define
periods of the volatility and adjust used technical indicators setting to
it. It is well know that in high volatile market the price trend changes
faster and trading system should react on the signals faster, otherwise it
could be too late to open/close a trade. At the same time in low volatile
market a trader may set the trading system to generate signals with delay
to avoid situation of premature opened/closed trades.
Chart 4: S&P 500 index - Standard
Deviation.
![S&P 500 index - Standard Deviation.]()
More Studies Coming
Stay with us - And always get the
latest in technical market analysis! ![]()
Market Outlook
Market Stage
(4/1/2009)
On Tuesday we mentioned in our
outlook that 'the new formation of bearish
volume accumulation on this chart may push the indexes towards recent
highs.' From an early deficit, the indexes moved higher and finished
positively.
The view presented by our 60-day SBV(20 period) charts
show a SBV advance. This is due to the strong single sided nature of
today's trend higher. At the end of the session, the SBV values turned
positive: plus 17% on the NASDAQ 100 and S&P 500 and plus 13% on DJI.
One interpretation of the rising SBV on this chart is to suggest further
advances.
However, the view of the lower term chart, the trend may
still align with the longer term 1.5-year SBV(10 period) chart view. This
shows declining SBVs on the S&P 500 and DJI, while the SBV is flat on
the NASDAQ 100. As the longer term view governs the overall trend, the
shorter term view can show an impending change in the trend. This longer
term view shows declining SBV and is not a positive sign, however the
absolute values of these SBVs are still at highly positive and because of
that we may assume that despite the declining SBV this chart is still
positive.
Market Status
(4/1/2009)
Market
Performance:
|
Last |
Change |
Volume |
A/D Ratio |
| S&P
500 |
810.44 |
![]() |
13.20
(1.66%) | |
5,015,949 |
3.85 |
| NASDAQ
100 |
1,252.51 |
![]() |
15.50
(1.25%) | |
988,557 |
3.30 |
| DJI |
7,758.02 |
![]() |
156.83
(2.06%) | |
1,745,214 |
29.00 |
On
the first day of the second quarter, the indexes advanced tentatively with
some sectors more positive than others. Overall, the NASDAQ 100 was ahead
by 1.25%, which pales in comparison to the S&P 500 which advanced
1.66% and the Dow which gained 2.06%. Cumulatively for the week, the
NASDAQ was ahead by 0.08%, The S&P was negative by a slight 0.67% and
the Dow was also negative although it was by a small 0.23%.
This
session's volume numbers was not unusual, the S&P 500 attained a daily
volume of 5,016 million shares. This is close to the average volume we saw
on a daily basis during the past 3 months.
NASDAQ 100 - 4/1/2009.
1-day Intraday, Modulated Volume.
![]()
Volume Analysis:
9:30 - 12:00
From yesterday's close, the NASDAQ 100 opened with a strong gap down.
Given the strong formation of Bearish volume at the end of yesterday's
session, the decline was somewhat surprising. This volume should have
supported the index and caused it to move somewhat higher or at the very
least remain unchanged. As the trading progressed however, the move higher
to close the gap continued to develop. The slope of the uptrend was very
steep and we can see some moderate surges of Bullish volume develop over a
broad area. At roughly 10:30 and then 11:30 we can see these surges of
volume produced very clearly.
Within an hour of the open, the index
closed the opening gap and it continued trending higher into the
midday.
12:00 - 16:00 With two large and clearly intense
surges of Bullish volume generated, the probability for a decline was
strengthening. From 12:00 until 12:30 the NASDAQ 100 gave back some of its
hard gained ground. At 12:30 we can see a clear up tick in Bullish volume.
These surges quickly stopped any further declines and already strong, the
trend higher continued.
Higher highs were to be the result in the
afternoon. But despite trending higher over 3% intraday, any further
advances could not be built upon and into the close, the index dropped
strongly only to limp into the close with a slightly positive
finish.
Short Term (lasts
a few hours to a few days): Since March 23 (8
trading sessions) the index has basically trended within a small chop
zone. And during time we have continued to write that 'conditions in the
market remains mixed'. The mixed nature does have a bias and currently it
is slightly down. In today's action however, a strong morning decline was
followed by a strong intraday trend higher.
The volume generated in
today's session was in form of Bearish volume during small declines in the
afternoon. From a longer term view, there continues to be a slightly
greater amount of Bullish volume produced which will still have the effect
of causing the index to decline at some near term. Having said that,
conditions remain mixed and therefore a neutral to slightly positive day
would not be out of the question.
Analyst's Daily
Tip:
Charts: Using different views and
settings
To put the magnitude of a volume surge into perspective,
it is essential to look at more than one chart and use multiple time
frames. For instance, while a volume surge may look imposing and seem
critical on 1-day or 5-day chart, that same surge may not loom as large on
a 30-day chart, and it might even seem insignificant on a 60-day chart.
Volume surges that are noteworthy on short-term charts must always be
placed in the context of the higher time periods, so that
misinterpretations of their potential impacts on mid- or long-term trends
can be avoided. For instance, a prominent surge appearing on a 5-minute
chart could well affect an index in the short term, but it may not
necessarily have much of an impact on the prevailing mid-term or long-term
trend.
Volume surges
Volume surges are evaluated
according to their magnitude and duration. It is vital to appraise each
particular volume surge before attempting to predict how it might impact
future market direction. We categorize volume surges as short-, mid-, or
long-term. We also classify intraday surges.
Short-Term Volume
Surges: These are volume surges that potentially affect market trends over
the short-term (i.e., anywhere from one to several days).
Mid-Term
Volume Surges: These are volume surges that potentially affect the market
over the mid-term (i.e., from several weeks to several months).
Long-Term Volume Surges: These are volume surges that have the
potential to affect market direction over the long-term (i.e., for up to
several years).
Financial Press
Overview:
According to Autodata Inc. car
companies sold 857,735 light vehicles last month. This equates to a 37
percent decline from a year earlier. The silver lining is the fact that
the American companies along with Toyota were positive by double-digits
over February's numbers (the lowest in 27 years). The average incentive on
vehicles sold was $3,169 up 30 percent from a year earlier. The drive to
offer more incentives has been pushed most readily by Hyundai and GM both
of whom have offered more on incentives than ever before.
Much of
the talk between economists is on the topic of how close the economy is to
the bottom. The Commerce Department has reported Wednesday that
construction spending dropped 0.9 percent in February. This marks the
fifth straight monthly decline however it was less severe than the
expected 1.5 percent decline. The slow down in the decline is also echoed
by the Institute for Supply Management which reported manufacturing rose
to 36.3 from 35.8 in February. The low number still implies that the
manufacturing sector is shrinking although not at the torrent pace it once
was.
Key economic data for the week
starting Mar 30th, 2009. Numbers shown are consensus estimates (market
anticipates this value) and prior value.
| Thursday: |
![]() |
08:30 Initial Claims
03/28 653K NA
10:00 Factory Orders Feb -0.3% -1.9% |
| Friday: |
![]() |
08:30 Average
Workweek Mar 33.3 33.3
08:30 Hourly Earnings Mar 0.2%
0.2%
08:30 Nonfarm Payrolls Mar -656K -651K
08:30
Unemployment Rate Mar 8.5% 8.1%
10:00 ISM Services Mar 42.0
41.6 |
![]()
If you have any questions, please do not hesitate to send us an
email. Our support team will work with you personally to provide you with
quality service.
Sincerely,
www.marketvolume.com
Highlight
Investments Group.
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