SPY - tools for swing trading a cap-weighted index

Steven Berry

The 4 pages of charts below display cumulative Advance-Decline breadth lines
which are the cumulative total of daily net Advance-Decline values

Common Stock Only indicators for the NYSE are calculated using approx.1800 common stocks
which are operating companies within the NYSE Composite Index (funds are excluded)
CSO indicators often present a more accurate internal picture for the NYSE Composite Index
The NYSE All Issues indicators are calculated using all issues traded on the NYSE

The McClellan Oscillator is the difference between the 19-EMA & 39-EMA of daily advances minus declines.
It reflects the short-term strength and direction of market liquidity.
A longer-term view is provided by the McClellan Summation Index, which is the cumulative total of the daily McClellan Oscillator values.
These indicators move within a trading range and often identify the overbought/oversold condition of the market

( McSum = McClellan Summation Index )

the dominant rule is: price will eventually follow the direction of the McSum, except for brief periods of price divergence

The McSum is neutral at the zero line,
bullish while above,
and confirmed bearish while below zero

* the distance down to the McSum zero line currently represents
one objective measure of the minimum downside risk

Confirmed sell signals are a lasting decline below the McSum zero line,
though price action has usually declined by a large amount by the time
zero is reached from the McSum peak above.

Large distances between the McSum daily chart values represent acceleration events in the A-D breadth decline or advance,
and the follow-on price impact has a high correlation with the McSum's direction, and usually has several days staying power

102 - S&P 1500 Advance-Decline Percent with S&P 1500 price action with 3 Bollinger Band settings

7/19

the S&P 1500 index internals displayed on this chart do not support the new record high price printed today by this index, so high caution is prudent unless these internals steadily improve

7/03

bullish only while price remains above 50 dsma ... internals are OK,
requiring improvement to strengthen the probability of a future bullish outcome

5/18

the net High-Low % prints below zero for 2 days, a
serious caution to the bulls & a high vigilance item
for any continuation

5/17

$545.20 is the April 21st close, before the large gap open on 4/24
vs. today's low of $545.87

* bulls want to see a lasting bounce from this level, or much lower
price levels are likely to be tested at some time

4/20

the April low vs. March low represents a higher low pattern, bullish while it lasts
$538.16 March low remains below as the un-tested low

Link shows daily price action up close -

https://stockcharts.com/h-sc/ui?s=%24SPSUPX&p=D&yr=0&mn=1&dy=25&id=p98113153194&a=517927603

$546.31 = 1st level of potential horizontal resistance, must become support to confirm future lasting upside price action

Distinguishing between a bull market correction actually reversing to the upside in a lasting way
or continuing to much lower price levels will depend
on this chart to a great degree

1/27/17 - Despite new record price high this week, 1/3 of stocks in the
S&P 1500 reside more than 10% below their 52-week high.

1/26/17 - the $535.32 new record high on January 26 resides
near the 3 std deviation 21-day Upper BB

1/24/17 a.m. - * price action tagged the Upper Bollinger Band, and reversed back down for today's close

103 - NYSE & common stock only McClellan Oscillator, McClellan Summation Index & A-D line

4/19 - triple-bottom at the March price low is potentially bullish while it holds

McSum is recently advancing, but remains below its 'ledge resistance' location from mid-March
Be skeptical of the McSum advance actually having staying power
until the McSum advance surpasses & holds above its ledge resistance

McSum displays few improvement days for all of March & April; the sustainable bullish case is far from proven

It represents optimal negative divergence by the McSum March/April pattern vs. the $NYA price action - with high odds for resolution soon
Either price or the McSum has a power move coming, or a grinding McSum upside move could resolve it

4/12 summary -

the single bullish argument with the most technical weight & merit is the number
of index McSum's above their zero line outnumber those below their neutral zero line:

NYSE Commons - above
NYSE all issues - above
Nasdaq Composite - below
Nasdaq 100 - above
S&P 500 - above
S&P 100 - above
Dow Jones Industrial - above
S&P 400 Mid Cap - above
S&P 600 Small Cap - below

104 - NYSE All Issues & ratio-adjusted McClellan Oscillator, McClellan Summation Index & A-D line

4/19/17 - day #3 the PMO attempts to violate the zero line,
* only a lasting hold below the neutral zero line is bearish confirmation

4/13/17 - day #1 the $NYA price closes below its $11,343.78 January 25th close,
representing the January daily close high, an important prior breakout mark,
* bearish only while price holds below this level

$11,249.28 remains below & yet untested from above is:
the prior quadruple-resistance mark at the Dec. 13th close, January 4/5 & Jan. 24th close levels,
* any future lasting price decline below this level will confirm an intermediate market 'top'
( Point & Figure charting 101 )

strong bearish signal that the internals are much more negative
for the NYSE common stock only symbol set than for the NYSE all issues symbol set

NYSE Composite Index monthly chart with Dow Jones Transports, S&P 500 index, & NYSE all issues McSum vs. its zero line:

* the pink overlay represents the plot of the monthly closes for /CL oil futures
* watch all these chart elements.
* 8 to 15% price declines in any future major retracement down will test and/or downside violate key levels for each chart element
* The early clues will unfold in this $NYA monthly & the daily/weekly $NYA

Shown in the chart link - $9198.20 is the $TRAN prior record daily close high in late 2014, above which the 'bullish breakout' case depends

https://stockcharts.com/h-sc/ui?s=%24NYA&p=M&st=2009-01-01&en=today&id=p59735735176&a=364138002

NYAD daily histograms, with 3 smoothing moving avgs. -
https://stockcharts.com/h-sc/ui?s=%24NYAD&p=D&yr=0&mn=8&dy=13&id=p73169467985&a=382915168

Vigilance watch the smoothed NYAD for:
1. trend change Confirm - smoothed NYAD status change vs. the NYAD zero line
2. for Positive or Negative Divergence vs. price structure
3. for incidents of 'tap and reverse' action following approaches of the Buy or Sell zones marked on the NYAD chart

105 - NASDAQ & McClellan Oscillator, McClellan Summation Index & A-D line

9/19

A-D line new high is bullish confirmation of the price action while
it continues to higher highs, time will tell so be vigilant of this metric

4/20

the April price low vs. March low represents a higher low pattern, bullish while it lasts

PMO this week achieves a new multi-month low at level not seen since early December, bearish while the PMO downtrend continues

* The McSum April high represents an actual reversal level taking place at the McSum 'ledge resistance' region from mid-March.
Be skeptical of any future McSum advance actually having staying power
until the McSum advance surpasses & holds above its ledge resistance

106 - NASDAQ 100 & McClellan Oscillator, McClellan Summation Index & A-D line

4/20

the April price low vs. March low represents a higher low pattern, bullish while it lasts

PMO continues to decline since March 1st, bearish while downtrend continues
PMO remains above its neutral zero line, which is potentially bullish

* McSum achieves a new March/April low this week,
downtrend by the McSum is evidence of internal weakness

107 - S&P 500 & McClellan Oscillator, McClellan Summation Index & A-D line

5/22

new A-D line high is bullish for SPX price aciton while its uptrend continues

5/18

* ongoing in April & May is the moderately serious caution for the bullish case
while this specific condition continues:
the McClellan Summation index for the S&P 500 has been
unable to surpass its 'ledge resistance' from the late March period

this technical attribute has high reliability for confirming future bullish price
action once a lasting McSum advance above the March 'ledge resistance' occurs
... it is prudent to be a skeptic

4/20

the April low vs. March low represents a higher low pattern, bullish while it lasts
$2322.25 March low remains below as the un-tested low

SPY $232.81 = 15wsma / bullish while above & bearish if closing below
* Note all of March & April price action resides above the rising 15-week sma,
& the April low resides above it

4/19
PMO today achieves lowest level since mid-November, a bearish event while
PMO continues to decline
* PMO confirms the bearish case only when a lasting hold below its neutral zero line

* McSum prints a new March/April low today approaching its neutral zero line
few McSum improvement days in March/April, which is bearish
the continued downtrend by the McSum represents bearish confirmation while it continues

1/27/17 - negative divergence since the 1st half 2016 by the lower highs pattern of the $BPSPX vs. the SPY price action higher highs pattern is telling
if a technician accepts resolution of such divergences requires patience for the powerful outcome to become evident in the price action
Much is said about interpreting the chart trend of Bullish Percents index in Thomas J. Dorsey's book on Point and Figure charts

* daily chart within the context of $BPSPX:$VXO ratio and the $VXO -

https://stockcharts.com/h-sc/ui?s=%24BPSPX%3A%24VXO&p=D&st=2009-01-01&en=today&id=p48157210897&a=230553765

108 - S&P 100 & McClellan Oscillator, McClellan Summation Index & A-D line

4/19/17 - the April re-test of the March price low has held, bullish while double-bottom continues to hold

PMO today achieves lowest level since mid-November, a bearish event
PMO now approaching zero means future direction requires vigilance

McSum prints a new March/April low today, and resides slightly below its neutral zero line,
which requires high vigilance for the eventual McSum outcome
few McSum improvement days in March/April, which is bearish
the continued downtrend by the McSum represents bearish confirmation while it continues

** Advance-Decline line displays lower highs & lower lows since March 1st, potentially
intermediate-term bearish for $OEX only while this chart pattern continues

RSP:SPY ratio -

This technical deserves a great deal of day to day vigilance, because it has high reliability
in the tool set of caution flags when price action is NOT being supported by
the direction of this internal.
The ratio reflects the degree of wide or narrow directional participation
by the 500 components of the S&P 500 capitalization-weighted index

Art Hill has written at StockCharts extensively over the years about the correct interpretation method for the daily RSP:SPY ratio

https://stockcharts.com/h-sc/ui?s=RSP%3ASPY&p=D&yr=1&mn=0&dy=0&id=p44383815563&a=401635439

1. the June/Oct 2016 RSP:SPY ratio's double-bottom structure is important for context, and reminds us to watch the ratio's October 2016 daily close low, if tested from above in 2017/2018

2. the ratio's April 2016 decline low merits our attention

3. chart showing S&P 500 new highs - new lows % sharpens the narrowing or widening measurement of actual participation by the 500 symbols

http://www.etfinvestmentoutlook.com/etf.php?s=SPY&c=breadth_new_highs_lows_avg_d

109 - S&P 400 Mid-Cap & McClellan Oscillator, McClellan Summation Index & A-D line

4/21 - the McSum April high represents a failure to surpass the McSum 'ledge resistance' region from mid-March.
Be skeptical of any future McSum advance actually having staying power
until the McSum advance surpasses & holds above its ledge resistance

PMO continues to hover near its neutral zero line,
which needs to change if price action is to have a lasting direction

110 - S&P 600 Small-Cap & McClellan Oscillator, McClellan Summation Index & A-D line

4/18/17 -11 consecutive days below the 50-day sma, bearish

PMO remains slightly below its zero line since mid-March, which represents
bearish confirmation while below the zero line
* PMO is located near the mid-November levels since mid-January, which is
potentially bearish that PMO bounces have not overtaken higher levels

4/11/17 - the McSum April high, so far, represents a failure to surpass the McSum zero line, bearish confirmation
Vigilance is required for the eventual zero line outcome

Few McSum improvement days in all of March/April, which is bearish

McSum note for future reference in the weeks ahead: Located at even higher McSum levels and above the McSum zero line
is the important potential horizontal resistance region located at the February McSum turn back up level
Be skeptical of any future McSum advance actually having staying power
until the McSum advance surpasses & holds above its important potential resistance level

111 - DJIA with McClellan Oscillator, McClellan Summation Index & A-D line

4/19 - index component, IBM, held the $159.84 monthly horizontal support today
for test #1 from above by the post-earnings release price decline

AAPL today is testing $141.05 horizontal support, the 20-day support level
$140.06 = 40-day horizontal support level, not yet re-tested in recent days

4/18/17 - day #4 closing below the 50-day sma, bearish

PMO today achieves lowest level since mid-November, a bearish event
PMO remains slightly above its zero line, bearish confirmation only when below the zero line

4/13/17 - McSum prints a new December through April low today, bearish confirmation event
few McSum improvement days in March/April, which is bearish
the continued downtrend by the McSum represents bearish confirmation while it continues

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