User Guide

To successfully trade stocks, or the major indices, one must consider three things: technical analysis, fundamental analysis and market breadth. 

The focus of this blog is strictly market breadth.

Whether the indices move up, down or sideways, they always go through overbought/oversold cycles. Because of indexing and passive fund management, individual stock moves are strongly correlated with the broader indices. Therefore, being able to determine whether the broader market is overbought or oversold should go a long way in helping you time your trades.

The gauges on the front page provide real-time readings for NYSE, NASDAQ, DAX, FTSE and CAC 40.

When Liquidity readings are within the green or red zone -- expect strong, directional trading, when the daily range may reach and exceed R3/S3 pivot lines.

When Liquidity readings are in the yellow zone -- expect choppy, rangebound trading, when the daily range usually remains confined within R1/S1 pivot lines.

The Market pattern number reflects the real time mood of stock market participants. Readings within the yellow zone are a sign of indecision and lack of strong bullish or bearish commitment among traders.

Monitor these tools during the trading day to gain invaluable market insight.

The charts below the gauges show the SP500 along with market internals in a historical context, and are being updated on a regular basis. The SPX & Weekly Mkt Breadth chart gets update once a week over the week-end. As a rule of thumb, 3600 and 1600 are considered overbought/oversold levels. Meaning that when market. breadth drops below 1400 it's time to start looking for long entries, and when it climbs above 3600, it's time to tighten stop/loss levels and start looking for short entries.

The average daily overbought/oversold cycle lasts 5 days.

You can follow the historical readings as well as individual symbol readings for Pattern and Power here.

You can learn more about our mobile apps here.