Technical Indicators Useful for trading

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1) ISEE Sentiment Index
From the International Securities Exchange. There is a descriptive article on the ISE page from the Wall Street journal describing this indicator. This data works best if you download it into an Excel spreadsheet and then plot the chart. The ISEE differs from other put/call ratios in that it includes only trades of customers opening a new option position rather than closing one, and it excludes transactions made by market makers. Thus it is a short-term indicator of how investors feel about their stocks now. For the last 2 years the sentiment index has fluctuated in a relatively narrow range; the buy signal being 90 > 100 on the 10 day moving average. The sell signal has been just north of 125 (Jan 3/08; May 1/08; Sept 3/08). During the more significant rallies of 2006-08 it ran as high as 145 until it suddenly reversed (Nov 3/06; May 16/07; July 17/07; Oct 16/07; Nov 6/07). By the time the overall market peaked in October 2007, there had already been a prelude of three (3) significant periods of market weakness (Sept 15/06; March 17/07; Aug 16/07).

2) SPX Fair Value and the Fed Model
When stock prices decline to the point that the SPX yield is higher than bonds, investors will likely allocate more capital back to stocks.

3) VIX Volatility Index
Historic
Current
From Stockcharts.com. The premier volatility (uncertainty) index. Readings above 17.5 are bearish; above 25 and up to 32 reflect extreme bearish sentiment in the market and thus a possible turning point. Levels below 17.5 were typical of the 2003-07 bull market. Sustained levels in a range of 17.5 to 32+ were normal during the latter stages of the 1990s bull market and the bear market of 2000-02.

4) VXN Volatility Index
Historic
Current
From Stockcharts.com. The Nasdaq Volatility (uncertainty) Index. Nasdaq bull markets have sported relatively benign readings in a range from 12 to 25. Extremely high readings were a feature of the VXN during the latter stages of the 1990s bull market and throughout the bear market of 2000-02. The current surge of volatility is a point of concern because it may mean we are returning to a sustained period of uncertainty and oscillating swings in stock prices.

5) Speculators: Bulls vs. Bears
Nasdaq SPX DOW Russell
These charts measure the spread between two sets of very speculative index mutual funds: the Profunds Ultra bull and the Ultra bear. The daily performance of each fund is 2x the percentage return of the underlying index (or its inverse). A 6 week exponential moving average (EMA) is included as a support and resistance marker and as an indicator of a trend change (when the ratio crosses above or below it).

6) SPX Momentum Indicator
2002-10 SPX
Current
From Stockcharts.com. This chart analyzes price strength on the S&P 500 Index by tracking the percent of SPX stocks trading above their 50-day moving averages. A 10 and 25 day exponential M/A is superimposed over the percentage. When the indicator's 10-day moving average (M/A) crosses above the indicator's 25 day M/A (or vice versa) trading signals are triggered. Levels above 80% indicate the market is reaching its highs, and conversely, when the indicator is at or below the 25% level, the market is approaching a valuable buy point. In bull markets the momentum indicator will rise quickly to the 80% mark and then "coast" for several weeks as SPX buyers trade toward a plateau. In a bull run any drops in buying pressure below the 25% mark tend to have a pronounced v-shape formation (quick fall, quick recovery). In bear markets the opposite is true: the momentum indicator will quickly form v-shaped tops but extend the bottoms for weeks as sellers unburden themselves of stocks.

7) NYSE Opportunity Indicator +Historical (1991-Present)
Maximum oversold readings in this indicator (near the -370 green Line) have been great buying opportunities for the SPX 500. Selling points are above 350.

8) SPX w/300 day Moving Average
A bull market is born when the SPX 500 rises above its 300 day moving average and stays there. During the last bull market (2003-2007) the SPX rose above its 300 day moving average in early March, 2003 and continued upwards through several tests of the moving average until January 3, 2008. The SPX has since decisively broken below its 300 day moving average and we are now in a bear market.

9) SPX Bullish % Index
The $BPSPX measures the number of S&P 500 stocks on their Point and Figure Buy signals. The higher the number, the more stocks that are participating in the rally. Like other indicators, you look for confirmation or divergences. Above is a chart of the S&P 500 with its $BPSPX as an overlay. Right now, only 31 percent (lower scale) of all S&P 500 stocks are on their Point and Figure (PnF) buy signal. This is bearish for stocks. During the October peak, that number was about 70. In early 2007, the $BPSPX was well above 80. (rev. 1.11.2008)

10) Nasdaq Momentum Indicator
2002-10 Nasdaq
Current
2002-10 NDX 100
Current
From Stockcharts.com. This chart illustrates the percent of Nasdaq stocks trading above their 50-day moving averages. A 10 and 25 day exponential M/A is superimposed over the number, while the price line underneath remains invisible. Signals: Highs (sell) are above 70%, lows (buy) are below 25%. This assessment tool should be combined with readings from the Nasdaq's short-term volatility (next).

11) Nasdaq & Russell 2000: the Moving Average Crossover
A simple and powerful indicator to discern the "right side" (bull or bear) of a trend. The chart illustrates the point where the 5 day moving average crosses above (or below) its 10 day moving average. When the red line crosses the blue line and the lines continue to diverge - a crossover is indicated and a trend change has occurred. You can use this indicator in conjunction with the momentum indicator (#10) above (there isn't one for the Russell). The momentum indicator reveals the trend (and the likelihood of it continuing); the crossover gives the correct timing to act.

12) Nasdaq Volume/SPX volume
Divides the 30 day moving average of the Nasdaq's Advancing (up) volume by the NYSE Advancing volume. Spikes in the volume correlate with market tops.

13) Nasdaq 100 Opportunity Indicator +Historical (1991-Present)
Maximum oversold readings in this indicator (near the -400 green line) have been great buying opportunities for the Nasdaq 100 and its exchange-traded fund, the QQQQ. Readings above 120 are overbought signals.

14) Nasdaq Bullish % Index
The $BPCOMPQ measures the number of Nasdaq stocks on their Point and Figure Buy signals. The higher the number, the more stocks that are participating in the rally. For the last three years each successive top has featured a bullish percent level near the 60% mark. Bottoms on the index seem to always land close to the 36% mark. The current level of 24% is extremely oversold. (rev. 1.11.2008)

15) NYSE & Nasdaq Summation Indices
From Stockcharts.com. The McClellan Summation Index is a popular market breadth indicator calculated from the number of advancing and declining stocks on the NYSE and Nasdaq exchanges. Derived from the McClellan Oscillator, it is a good indicator of the market's immediate forward trend. The McClellan Oscillator is used for short term trading. The Summation Index is a longer range version of the McClellan Oscillator and is used for identifying major market turning points. To read more about this indicator see The McClellan Summation Index at Stockcharts.com.

16) NYSE & Nasdaq Summation Indices (Historic set of charts)

17) NYSE & Nasdaq New Highs and Lows
The spikes of highs and lows (below) are indicators of trend changes in the market
Nasdaq: # of Stocks hitting new highs
NYSE: # of Stocks hitting new highs
Nasdaq: # of Stocks hitting new lows
NYSE: # of Stocks hitting new lows
Nasdaq: # of Stocks hitting new lows (historical)
NYSE: # of Stocks hitting new lows (historical)
Nasdaq: # of New Highs / new lows
NYSE: # of New Highs / new lows
Nasdaq: # of New Highs minus new lows
NYSE: # of New Highs minus new lows
Nasdaq: Volume in stocks advancing
NYSE: volume in stocks advancing
Nasdaq: Volume in stocks advancing (Historical)
NYSE: volume in stocks advancing (historical)
Nasdaq: Volume in stocks declining
NYSE: Volume in stocks declining
Nasdaq: Volume in stocks declining (Historical)
NYSE: Volume in stocks declining (historical)
Nasdaq: Vol advancing/ Vol declining (lows)
NYSE: Vol advancing/ Vol declining (lows)
Nasdaq: Vol advancing/ Vol declining (historical lows)
NYSE: Vol advancing/ Vol declining (historical lows)
Nasdaq: Vol declining/ Vol advancing (tops)
NYSE: Vol declining/ Vol advancing (tops)
Nasdaq: Vol declining/ Vol advancing (historical Tops)
NYSE: Vol declining/ Vol advancing (historical Tops)

18) Leading Volume Indicator
2001-03 NYSE
Current
2001-03 Nasdaq
Current
Cumulative volume indicates the bias of Investors' ($) intentions. In this chart, the advance/decline lines for the NYSE and Nasdaq are compared to the moving averages of their up and down volume. If the moving averages (the blue bars) are weak or trending downward and the A/D line is advancing, this warns that that fewer and fewer buyers are taking stocks higher. This negative divergence was evident for the NYSE in Q1 of 2004, 05, & 06. But the converse is also true. If the blue bars (below 0) are trending upward, or are simply smaller, less volume from sellers is taking stocks lower and the underlining direction is up. This appears to be the case with the NYSE - which has a large preponderance of financial stocks, the source of the current downturn.(rev. 1.11.2008)

19) Dow Theory - Transportations/Industrials ratio
1980-2010 Tran/Indu
Current
The Transports are an early cyclical group while the more diversified DJIA is comprised of relatively later cycle groups. Therefore, it would be expected that the Transports would lead the DJIA into the early or accelerating stages of an expansion, and vice versa, into a downtrend. The Dow Jones Transports quite often leads the industrials at important junctures.

Baltic Shipping Rates - a good indicator of forward orders for the worldwide transportation of goods. A rising line shows expansion, a falling line indicates contraction. Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on many routes internationally. Movements in the Baltic Index tend to precede movements in global stock markets. But the index also tends to presage higher interest rates. When more goods are being shipped around the world, they need to be financed. And that creates a greater demand for credit. The Baltic Index provides both a rare window into the highly opaque and diffuse shipping market, and an accurate barometer of the volume of global trade.

20) Helene Meisler- Overbought/Oversold Indicator
The moving average of the net of advancing stocks minus declining stocks in 4 daily time periods: 10, 25, 50, and 200. This indicator measures time and momentum, and is excellent at sniffing out those two to three exceptional buying and selling opportunities per year. As you click through the averages from left to right - from the lower moving averages to the higher 200 day moving average - the chart lines will smooth out and the trend will come into focus. Readings below (-150) on the Nasdaq and zero (0) on the NYSE are indicative of a bear market.
10 day M/A
25 day M/A
50 day M/A
200 day M/A
200 day M/A (1991-2010)

Nasdaq
Nasdaq
Nasdaq
Nasdaq
Nasdaq

NYSE
NYSE
NYSE
NYSE
NYSE

21) The Net commitment of Traders (COT)
S&P 500
Nasdaq
This bar chart differentiates the long and short biases of commercial traders with those of large and small speculators on the SPX and Nasdaq. The commitments of commercial traders' long positions relative to their short positions appears to be one of the best forecasts of market direction.

22) Commodities
Historical
CRB
Gold
Oil
Dollar

Current
CRB
Gold
Oil
Dollar
A new bull market in commodities began in October, 2001 with the rise of oil, natural gas, gold, metals, corn and other commodities. Above are some quick links to the CRB, gold, oil and the dollar. Recent action (July, 2008) shows a sharp contraction in all commodities after their parabolic run dring the first half of 2008. From the looks of oil and gold, this 7-year run may be over. (rev. 8/5/2008)

23) Leading Dollar Indicator
Bond yields tend to lead the US dollar by several weeks. They also are predictive of Federal Reserve policy. In this graph, the blue yield line (TNX) is charted 70 days into the future and overlaid on top of the dollar line. The assumption is that bond yields ($TNX) are a forerunner for the direction of the U.S. dollar ($USD

24) NAHB (National Association of Homebuilders) Housing Index
25) Consumer Confidence
26) Consumer Sentiment
27) Investors Intelligence Survey
28) Equity Put/Call Ratio

30) DRAM Exchange Index -DXI [Requires signing up (free) and automatic download of Adobe SVG viewer]
The DXI index provides users with an easy to understand graphical representation of the semiconductor industry's DRAM market trend. The index is calculated by multiplying mainstream DRAM chips with their respective street price. The DXI index not only reflects the output value of the DRAM industry, it also depicts the stock price changes of DRAM makers. Therefore, the index provides users with an accurate account of the highly volatile memory business and a strong correlation with the spot price.

31) Solar Stock Comparison Table
Click on the stock symbols for an overview of each company within the Solar food chain. Ramping solar stocks are almost always a sign of an overheated market.

32) Credit yields
This section includes Markit's weekly wrap on the credit markets, plus historical charts on yield spreads for AAA through BBB asset-backed commercial paper. Markit's new ABX indices make it easy to track the current values of different grades of commercial paper. Click on the blue-highlighted closing prices (for example: ABX-HE-AAA 07-2) to see a recent chart for each asset class. There is also a tab with a list of constituents. Since the rapid drop in 2Q'2008 the value of credit spreads has been quietly improving. (rev. 8.11.2008). Lastly, here is a table of all bank credit in the U.S.

U.S. Treasury Yields
This table compares the relative direction of yields. It illustrates the bond market's current view of the economy. A downward direction in long term rates relative to short-term rates indicates a slowing in the economy; it can also indicate a lessening of inflation expectations (which is positive for stocks). Rising long-term rates relative to short-term rates indicates a rise in economic output. A sharp rise or fall in the overall comparison indicates a turning point, usually several months in advance of its effect on the economy.

Short-Term
Long-Term
1 Month
3 year
3 month
5 year
6 month
10 year
1 year
20 year
2 year
30 year

33) Dynamic Yield Curve (Stockcharts.com)
May require a java download. (Wait a few seconds for this page to load) Compares bond market with the interest-rate cycle. Includes a live-action chart of short-term interest rates for the last 30 years, hyperlinked to the SPX 500 chart. For an analysis of the yield curve see The Yield Curve by John Mauldin. The primary value of the yield curve is its forecasting ability before a recession.

"The difference between long-term and short-term interest rates ("the slope of the yield curve" or "the term spread") has borne a consistent negative relationship with subsequent real economic activity in the United States, with a lead time of about four to six quarters. The measures... most frequently employed are based on differences between interest rates on Treasury securities of contrasting maturities, for instance, ten years minus three months....Predictive power has been found (to) include GNP and GDP growth, growth in consumption, investment and industrial production, and economic recessions.... The yield curve has predicted essentially every U.S. recession since 1950 with only one "false" signal, which preceded the credit crunch and slowdown in production in 1967. (Arturo Estrella, New York Federal Reserve Bank, Oct. 2005)
Additional Breadth Indicators
See attached link.