(2020-03-01, 01:05 PM)isatrader Wrote:

(2020-03-01, 12:28 PM)pcabc Wrote: Would those views apply to investor positions as much as trader positions?    The reason I ask is there does not seem to be much in the way of a divergence in the advance / decline line for example.  THe % stocks abovre the 50 day MA was > 70% for a while but the % above the 200 day MA has only been grazing it and it does seem to vary depending on which dataset you pick.  I've not seen the breakdown in the momentum index that you have seen, and as I post elsewhere, I have been having data issues of late which makes apples to apples comparisons difficult.

Back to the % stocks above the 50 and 200 day MAs (I don't have 150 day data).  From my data it has been notable that they have been declining since the end of January but only crossed below 50% in the past week, right at the start of the meltdown.

The NYSE advance decline line was only showing some small divergences via the different Momentum indexes and the McClellan Oscillator and summation index. But the other Nasdaq AD Line and the NYSE AD Volume both had divergences and weren't making new highs with the price action.

With the Percentage of Stocks above the 50, 150 and 200 day MAs, they all gave bear alert signals in the middle of January (see investorsintelligence.com - Definitions of current Market Breadth Status) when they moved strongly back below 70% while the stocks were making new highs still. You are right though that the 150 day and 200 day only gave full bear confirmed signals on the breakdown this week. But the short term 50 day MA gave a Bear Confirmed signal on the 27th January.

So this and other changes is why I had been highlighting in my videos for the last month that we needed to protect our account and have a more defensive strategy. As the market was very extended after 5 months of running strongly higher, and the breadth was showing some weakness appearing, which is why I had downgraded the Weight of Evidence to Neutral + status before this weeks fall. Which means taking a more defensive strategy in my playbook. But that is obviously more difficult for an investor than a trader.

(2020-03-01, 01:05 PM)isatrader Wrote: The NYSE advance decline line was only showing some small divergences via the different Momentum indexes and the McClellan Oscillator and summation index. But the other Nasdaq AD Line and the NYSE AD Volume both had divergences and weren't making new highs with the price action.

Quote:With the Percentage of Stocks above the 50, 150 and 200 day MAs, they all gave bear alert signals in the middle of January (see investorsintelligence.com - Definitions of current Market Breadth Status) when they moved strongly back below 70% while the stocks were making new highs still. You are right though that the 150 day and 200 day only gave full bear confirmed signals on the breakdown this week. But the short term 50 day MA gave a Bear Confirmed signal on the 27th January.

So this and other changes is why I had been highlighting in my videos for the last month that we needed to protect our account and have a more defensive strategy. As the market was very extended after 5 months of running strongly higher, and the breadth was showing some weakness appearing, which is why I had downgraded the Weight of Evidence to Neutral + status before this weeks fall. Which means taking a more defensive strategy in my playbook. But that is obviously more difficult for an investor than a trader.

(2020-03-01, 01:50 PM)malaguti Wrote: This is a plus for the breadth calculations, that we had early advance of this
and it would be amazing if this site was used to highlight the fact and showcase weinsteins work
one of the problems we have is so many breadth "charts" that people post, its actually hard to see where it was a bearish signal. as nobody actually says so. we just keep posting charts, more charts..what do all these charts mean?
rather than having to refer to a definition, or refer to someone else's blog..here's my breadth charts and now come to my site, if we could just summarise
"one source of the truth" as it were
i can see a post of the 23.02 but it seems to give a very mixed picture

You could give a subscription based service. probably colour coded for idiots like me.

(2020-03-01, 05:10 PM)isatrader Wrote: The market breadth is excellent at helping with market timing, but it is quite subjective and open to interpretation, as different breadth indicators can be telling a different story to each other. So that is why I favour the weight of evidence approach advocated in Weinstein's book, as it gives you a combined result, which helps to filter the noise, and then you can determine which strategy you should be using.

Thomas Dorsey has done some great work on this area, and he uses an American football analogy for the Bullish Percent Chart and Moving Average Breadth, converting the 0-100% range to the American football field zones. i.e. you should be using a different playbook / strategy for when the breadth is in the different zones. So for example when the breadth is still rising above 70% you should add defensive stable positions. But when it's falling and above 70% you should be on Aggressive Defence, and Decreasing Volatility, and Raising Cash Levels etc (see attached Bullish Percent playbook).



So I use a similar approach, but based on the entirety of the market breadth charts that I follow to determine which playbook I should be using. Defensive Strategies, or Offensive Strategies.

(2020-03-01, 05:19 PM)pcabc Wrote: Regarding the bullish % or % stocks above their MAs.  Though you talks about weight of evidence you seem to pay particular heed to these?   If so, are you suggesting that if above 70% or below 30% then these indicators should be given more consideration to than other indicators?

(2020-03-01, 05:36 PM)isatrader Wrote:

(2020-03-01, 05:19 PM)pcabc Wrote: Regarding the bullish % or % stocks above their MAs.  Though you talks about weight of evidence you seem to pay particular heed to these?   If so, are you suggesting that if above 70% or below 30% then these indicators should be given more consideration to than other indicators?

From an investor perspective, yes. These do get more weighting than anything else when they reach the end zones at the top and bottom for me. As buy and sell signals from these areas are the strongest, and only happen once every few years or so. So I do favour these above the others as a market timing tool. But are even better when they align with the other breadth charts signals too. But I do think that they are most important as they give you similar insights to the Stages Survey.

You might find the following useful, which was a post on the DWA website back in early 2012 that shows the long term stats for what happens when the NYSE Bullish Percent Index first hits the 70% level on the way up (in this case the S&P 500 topped 56 days later), and their explanation of the Bullish Percent Index, and how it's used.