This index is a summation of seven indicators explained in detail here.
- Stock Price Momentum: The S&P 500 versus its 125-day moving average
- Stock Price Strength: The number of stocks hitting 52-week highs and lows on the New York Stock Exchange
- Stock Price Breadth: The volume of shares trading in stocks on the rise versus those declining.
- Put and Call Options: The put/call ratio, which compares the trading volume of bullish call options relative to the trading volume of bearish put options
- Junk Bond Demand: The spread between yields on investment grade bonds and junk bonds
- Market Volatility: The VIX, which measures volatility
- Safe Haven Demand: The difference in returns for stocks versus Treasuries
Then we put all the indicators together - equally weighted - for a final index reading."
With the index starting to move higher after sharp decline below 40, it is possible the current market correction is about over.
Make sure to read "Timer Digest Market Timer of the Year Awards"
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