Saturday, January 15, 2011

Market bullish reversal indicators

After a bear market, when fear is entrenched and despair rules the day, there comes a time when it is fit to get back in the market.  These are the signs that a wise investor should be on the lookout for.


  1. The 50-week MA of the weekly CBOE Options Put/Call ratio ($CPC) crosses below one.
  2. If the 20-week MA of the weekly Percentage of NYSE Stocks above their 200-day MA ($NYA200R) crosses above 50, it indicates that the market is moving higher and will probably continue to do so for a while.
  3. When the Wm%R(63) of the weekly S&P 500 crosses above 50, it may be time to get back in, especially if confirmed by a positive CMF(63) or ROC(40).
  4. When the market gains 19% from a recent low, it's a likely sign that the bear market has reversed itself and a new upward trend has been established
  5. Bullish divergence between the 20-day MA of NYSE Advance-Decline Issues ($NYAD) and $NYA. This happens when $NYA forms a lower low but the MA(10) of $NYAD for a higher low. Normally, lower lows should confirm each other between these two indices. When they don't, the $NYAD suggests the new direction of the trend.


These are the last times these signals occurred.

SignalDateS&P Close
$CPC2/27/2009735
$NYA200R8/7/20091010
Wm%R(63)8/21/20091026
19% gain from bottom3/23/2009822
$NYAD bullish divergence3/13/2009756

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