The Hidden Message in the Stock Market Revisited, Part
Three
So what’s happening now on this day of Tuesday, April 19 2016. Longer term mom is way above its
signal line. Intermed term is way
above its zero line and is overbought. Short term oscillator is making a lower
top. The market has had an extremely strong move up from its bottom. So in the
short term (next few weeks) it is due for some type of pullback. But in
the longer term which is the neighborhood I hang out in, things look fine. When the market experiences such a strong impulse wave up from a bottom it is usually a harbinger of better times ahead. This
is the backdrop for the current market environment. There still seems to be a
fair amount of bearishness out there which is good. Bull markets climb a wall of
worry. If you are a long term holder of stocks, stay the course and tune the media out.
To recap the four things I look at to evaluate the state of the current market environment are...
the
advance decline line with it's 39 and 144 day ma (only the direction is of this data set is important.)
the
long term momentum of the a/d line (both the direction and level of this
indicator are equally important.)
the
intermediate term momentum of the a/d line (both the direction and level of
this indicator are equally important.)
the
short term oscillator of the 10 day ma daily a/d differential.
Incidentally, you can use chart patterns and trend lines on the intermed term mom which I have found interesting in the past. If you don't want to bother with any of this good stuff, keep an eye on the MClellan Summation Index (another version of intermed mom) which you can find here...and remember nothing ever really bad happens when the summation index is above zero...
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