Wednesday, December 09, 2009

Tracking the Stock Market's Short-Term Trending

Is the market trending up, trending down, or running in a range? That's a question that is relevant across multiple time frames. In recent posts, I've emphasized intraday measures of trending, such as NYSE TICK, Market Delta, and TICKI, which capture short-term sentiment. But how about trend measures at longer time frames?

In my morning Twitter posts (follow here), I track several measures of market momentum and strength that can illuminate short- to intermediate-term trending. These include the number of stocks making 20-day highs vs. lows across the NYSE, NASDAQ, and ASE; the Demand/Supply Index of the number of stocks closing above vs. below the volatility envelopes surrounding their moving averages; the number of stocks in my basket closing in uptrends, neutral, and downtrends; and the number of listed stocks trading above their 20-day moving averages.

Here's my post for this morning:

4:25 AM CT - Tues: 712 20-day highs, 719 lows; Demand 33, Supply 134; Basket: 10 stks uptrend, 10 neutral, 20 dn; 51% stks > 20 day SMA

If you compare the entry to yesterday's entry, you can see weakening day over day. You can also see from the above that we've moved from a largely neutral trending mode to a downtrend. These figures can provide a day over day perspective that helps traders frame larger timeframe ideas.