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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 |
![]()
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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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