The Daily Stock Barometer is a proprietary measure of market energy. The direction of the stock barometer determines our short-term outlook on the market's direction. A BUY or SELL signal is triggered when the indicator clearly changes direction. If the line is moving up, we are in BUY MODE and if it's moving down, we are in SELL MODE. The black line is a 5-day moving average that we use to confirm changes in direction.
EQUITY PUT CALL RATIO CHART
The CBOE put/call ratio is comprised of two sets of data; equity options and index options. The index component contains items that are used as a hedge, thereby distorting the correlation and interpretation of the indicator. I use the equity put/call ratio. This is one of the most accurate read of investor's fear and complacency.
Richard Arms developed the arms index. It is also referred to the Trading Index or TRIN for short. It is a measure of the ratio of up stocks and down stocks divided by the ratio of up volume and down volume. Our Spread Chart converts the arms index data into momentum Buy and Sell Signals.
TICK CHART
The tick index is represents the sum of all stocks ticking higher minus all stocks ticking lower (a stock is said to be trading on an up tick when it trades at a higher price than the last sale). It's utilized as a day trading tool as it gives you an up to the second read of the intensity of buying and selling.
BREADTH (ADVANCE - DECLINE) CHART
I monitor Gold in the form of GLD and the XAU as well as the US Dollar Index as a general guide to the overall health of the US Economy and the markets, as well as to assist us in the entry of positions in our Gold Stock Service.
I include bonds in our studies and use Lehman’s 20 year ETF, as the direction of bonds can have an inverse impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.
Summary & Outlook
We remain in Buy Mode as we sit amidst the days surrounding key reversal date. The last Bi-Weekly that I sent out, I had mentioned that the projected sell signal could possibly occur on March 23rd, which was 11 days from the previous signal. Now, seeing that we haven't changed modes yet, I have adjusted the projected sell signal to March 27th - or 13 days from the previous signal (since we won't be changing modes on before trading on Monday).
The number 13 has a great significance to me. 13 is a Fibonacci number and most of the time Fibonacci numbers can be used with great accuracy to time the market. While you can look at the Buy and Sell signals above and note that not all of them occurred exactly on Fibonacci numbered periods, our last change was (34 days) and there were others scattered about (some 8's and a 5), and yet still others that were close to Fibonacci numbers.
Obviously every actual market cycle turn isn't going to land on an exact Fibonacci number. That would be too easy to plan out and we would all be millionaires. Where is the fun in that? It is just something to think about, watch and incorporate in our trading plans.
Again, if you're new to the biweekly stock barometer, welcome. This article comes out every 2 weeks and gives a big picture view of the market and our recent activities. If you're interested in following our signals and learning more about our system, then I invite you to click here and subscribe to the daily service - since the market can turn on a dime and so to can our interpretation as the market gives its daily clues to the future. Or sign up for our free weekly newsletter, where we provide up to date articles from our various trading services. We're also going to be releasing a free trading video in 2007 - so sign up today.
As always, if you have any questions or comments, feel free to email me here at
Regards,
