[isatrader]

With the bull market obviously well under way are you guys mainly looking for stage 2 continuation plays or are you finding stage 1 plays too?

The method suggests that at this point in the cycle that even investors should be more weighted towards Stage 2 continuation moves, as the best time for buying early Stage 2A breakouts is when the overall market is recovering in Stage 1 / early Stage 2, which last happened in late 2011 following the brief Stage 4 decline.

However, they are always early Stage 2A breakouts even at this point in the market cycle as sector rotation causes new leaders to emerge and out of favour sectors recover at different times, but obviously the pickings are thin at this point, so quality of picks is even more important. i.e. make sure any Stage 2A breakout you do trade has all the key criteria of potential A+ pick. But, the majority of your trades should be continuation moves and pullbacks already in Stage 2 at this point imo, and quality of picks is even more important at this Stage.

[BoyPlunger]

I'm trying to replicate the advance decline momentum index. Does this look right to you?



It's a daily chart on the "T2100" which is telecharts NYSE advance decline that has been "improved". I then simply added a 200 day MA.

In your opinion, is it important on these indicators to zero the moving average? I cannot seem to replicate the zeroing of MA's in telechart.

[isatrader]

I'm trying to replicate the advance decline momentum index. Does this look right to you?

It's a daily chart on the "T2100" which is telecharts NYSE advance decline that has been "improved". I then simply added a 200 day MA.

In your opinion, is it important on these indicators to zero the moving average? I cannot seem to replicate the zeroing of MA's in telechart.

No, that's not the Momentum Index. What you've got there is the Cumulative Advance - Decline Line.

The Momentum Index is the 200 Day moving average of the daily NYSE Advancing stocks minus the Declining stocks.

I post the Momentum Index every weekend in the Market Breadth Update thread with the other two main Advance Decline Indicators, and more variations in the subscriber only Market Breadth Extra thread in the elite section of the website. So if you can't create it in the software you are using then an up to date version is always available on here.

Attached is a marked up version of the latest Advance Decline Line charts that I posted at the weekend in the Market Breadth thread for you to compare with, which has the three main Advance Decline Indicators.

• Cumulative Advance Decline Line
  
• Momentum Index
  
• 10 Day Advance - Decline Line Oscillator - which is used for shorter term signals
  

[BoyPlunger]

Your momentum index (2nd pane down) looks a lot different to the one in the book:



Is it possible to replicate Stan's closely by zeroing the 52 week MA?

Stan mentions passing from positive to negative territory etc as how the momentum index signals a bearish move - How is this signal given on your version?

Thanks

---

addendum, please point out why this is not similar to Stan's momentum index.

It's a flattened 52 week MA with the NYSE advance/declines oscillating around it.

[isatrader]

Your momentum index (2nd pane down) looks a lot different to the one in the book:



Is it possible to replicate Stan's closely by zeroing the 52 week MA?

Stan mentions passing from positive to negative territory etc as how the momentum index signals a bearish move - How is this signal given on your version?

Thanks

It's identical to the one in the book, I just show a much shorter time frame on the weekly updates and so the zero line is off the bottom of the chart, as the one in the book shows seven years of data, whereas the one in my chart is only just over one year of data.

So to create it you need to use the 200 day moving average of the daily advances minus the declines in the NYSE.

Attached is the same chart expanded out to seven years where you can see the zero line cross that last happened in mid 2009. It's a very long term indicator and so rarely crosses the zero line

[BoyPlunger]

Ok thanks, I think I'm misunderstanding how these are set-up. So the momentum index is the moving average of the A/D line oscillating around a zero line (not the A/D line oscillating around a zeroed 52 week average? as I believe mine above is).

[isatrader]

Ok thanks, I think I'm misunderstanding how these are set-up. So the momentum index is the moving average of the A/D line oscillating around a zero line (not the A/D line oscillating around a zeroed 52 week average? as I believe mine above is).

Yes, it's just a 200 day moving average of the daily advances minus the declines. Attached is a one year chart of how the chart looks with the Advances minus the Declines not hidden. It's the same chart, and the blue line is the momentum index (200 day MA) that you could see on the previous chart, so the straight data is hidden as it oscillates wildly every day from plus to minus figures and only 200 day MA is then used to create the momentum index.

[BoyPlunger]