The Next chart is the “Percent of NYSE stocks above their 200/50/20 day moving average”.  To help identify intermediate term lows we turn to the “NYSE stocks above 200 day moving average” because this takes in the account of the intermediate term timeframe.   When a stock is above a moving average then it’s considered bullish and vice versa.  However, when most stock based on a percentage that is below 20% then the market is considered oversold and due for a rally.  The chart above is the NYSE which dates back to 1987.  The second window down from the top is the “NYSE Stocks above 200 day moving average” and the window we want to analyze because it’s the timeframe that we want to monitor.  When the “NYSE percent of stocks above 200 DMA” fall below 20% then bargain hunters come to the table to buy stocks cheap.  Since 1987, stocks above 200 DMA fell below 20% nine times (not counting current reading) and all nine times the market rallied a decent percentage. Notice also that “NYSE stocks above 200 DMA” fell below 20% and helped pick out the October 2001 low (circled in Blue on chart) and help confirmed the Bullish Percentage Index that was generating a bullish signal at the same time.  Notice the current bullish (NYSE stocks above 200 DMA below 20%) supports the bullish BPI on first page. 
 

The next chart is On-Balance Volume (OBV) Indicator Set:  OBV is calculated by adding the daily volume to the cumulative total of volume if the stock closes higher than the previous day, or subtracting it if the stock closes lower. (No change days are ignored.).  Therefore OBV helps a trader to identify the volume flows of an issue or index and determine if it’s bullish or bearish.  The Volume Trend Oscillator (VTO) (bottom window) summarizes rising and falling OBV trends and takes a longer term view of the market and is the indicator we want to analyze.  The chart above is the S&P 500 (SPX) dating back to 1999.  When VTO reaches below -50 then the SPX is near an intermediate term low.  VTO hit below -50 seven times (not counting current reading below minus 50) going back to 1999 and in all cases after, the market produced a worthwhile rally.  Notice that a bullish signal was generated by VTO in October 2001 (Bear market bounce), just as BPI and NYSE stocks above 200 DMA below 20% did.  The recent low in late January produced a bullish signal by VTO.  The intermediate term picture is bullish.  The short term price is not real clear but there is a chance the SPX could test the 1/23 low near 1270 range before heading higher.  Today’s volume and price range was relative quite compared to recent market action and suggests this “may be quite before the storm”.  In other words volatility may pick up shortly. 
 
My book “Secret Science of Price and volume” is hitting book stands.  We will autograph it if bought through our web site at www.ord-oracle.com.
 
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