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%NYSE STOCKS ABOVE 200-DAY AVERAGE STILL DROPPING

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Last Thursday's message showed the point & figure version of the % NYSE stocks above their 200-day moving average in a downside correction. I suggested that the first sign of improvement would be a three-box reversal to a rising X column. We got that this week, but it proved short-lived. That's the bad news. The good news is the p&f chart now gives us a clearcut chart point to use to spot any market upturn. A traditional p&f buy signal requires a rising X column to exceed a previous X column. This week's high point was at 60. That means that the $NYA200R needs to hit 61 to signal a possible upturn. Why this indicator is worth watching is that virtually all major US stock indexes are now testing their 200-day moving averages and major chart support along their March lows. Chart 2 shows the % NYSE stocks above their 50-day averages still in a downtrend but dropping into oversold territory below 20%. That more volatile measure needs to rise to 25 to signal a possible bottom.

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John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, an renowned author in the investment field and a former technical analyst for CNBC. With over 40 years of market experience, he is the author of numerous popular works including Technical Analysis of the Financial Markets and Trading with Intermarket Analysis. John's timely market commentary and expert analysis is available exclusively for StockCharts Members through his Market Message blog. Learn More
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