I've been doing this analysis by hand since April 28, 2015 in a spreadsheet at Google.
4/28/2015 1:30 PM 46.70% 53.30% 18111 17960 4/29/2015 9:44 AM 40.00% 60.00% 18083 17975 PFE, MRK reported 4/29/2015 2:26 PM 46.70% 53.30% 18055 17975 4/30/2015 9:55 AM 46.70% 53.30% 17968 17970 4/30/2015 10:47 AM 43.30% 56.70% 17930 17977 4/30/2015 3:54 PM 40.00% 60.00% 17876 17977 5/1/2015 10:30 AM 46.70% 53.30% 17977 17977 5/4/2015 10:47 AM 43.30% 56.70% 18102 18052 Apple rally faded right near KEY LEVEL. 5/4/2015 3:50 PM 43.30% 56.70% 18070 18038 5/5/2015 4:00 PM 40% 60% 17928 18039 5/6/2015 11:40 AM 40% 60% 17,865.67 18039 Biggest spread from the KEY LEVEL I've seen. Bond mkt and US DOLLAR tumbling
I've also added "% of stocks above their 50 day moving average" since I think that might approximate this indicator and to just see how helpful it is and to learn.
I've noticed so far that the market has traded quite closely to the KEY LEVEL so far.
Note we are right on the 66-day moving average, which is 1-quarter of data, which certainly is the time frame of the distance between earnings reports.
I put "short" on here because the DOW is below the KEY EARNINGS LEVEL of 18039.
How you want to trade it is up to you: I think you can execute right "at" the KEY level by selling a rally up to it and risking 1 average range. The target might be just 1 average range also. That is just one method of trading this. You could certainly trade this any way you see fit. The key is knowing if the market is being "accumulated" or "distributed" and as it is now, it is being "distributed" since we are below the average KEY LEVEL. It shows that people are disappointed with the earnings reports and the forecasts for the coming quarter.
The KEY EARNINGS LEVEL overall for the Dow has dropped thanks to Walmart's drop on earnings. The new Key Level is 18101, down from 18144. There are 63.3% of stocks 19/30 above their key level of earnings.
reluctantplumber
⋅
It will be interesting to watch this develop into a historical key metric.
timwest
⋅
Thanks for the encouragement Robert. It's good for us to take the "wizardry" out of technical analysis and make it logical and sensible for the average person. This metric might just be a great leap forward.
timwest
⋅
Updated now, 2:24PM, Tuesday, May 12, 2015: 16 of 30 stocks are over their Key Earnings Level, which is still 18039. The market bottoms out when it is -100 or -180 points down from the KEY LEVEL of all the DJIA stocks. The DJIA is 44 points OVER the key level now.
claydoctor
⋅
Nice work Tim, thanks.
timwest
⋅
DATE TIME ABOVE KEL BELOW KEL DJIA KEY LEVEL Notes
4/28/2015 1:30 PM 46.70% 53.30% 18111 17960
4/29/2015 9:44 AM 40.00% 60.00% 18083 17975 PFE, MRK reported
4/29/2015 2:26 PM 46.70% 53.30% 18055 17975 Key Level Tested & Held, Then Banks lift above KEY Levels
4/30/2015 9:55 AM 46.70% 53.30% 17968 17970 Testing again. Surprising that the market is balanced with all the QE
4/30/2015 10:47 AM 43.30% 56.70% 17930 17977
4/30/2015 3:54 PM 40.00% 60.00% 17876 17977 MCD dropped under by 40 cents. Market is melting down into April end.
5/1/2015 10:30 AM 46.70% 53.30% 17977 17977 NKE back over (back and forth over last month), MCD back over. From 12 to 14 over.
5/1/2015 11:00 AM 18049 CVX still forming, but Key Level rises to 18049 with Visa and CVX updates
5/4/2015 10:47 AM 43.30% 56.70% 18102 18052 Apple rally faded right near KEY LEVEL.
5/4/2015 3:50 PM 43.30% 56.70% 18070 18038 CVX moved lower, as did XOM, dragging down the KEY LEVEL.
5/5/2015 4:00 PM 40% 60% 17928 18039 CVX finalized key level.
5/6/2015 11:40 AM 40% 60% 17,865.67 18039 Biggest spread from the KEY LEVEL I've seen. Bond mkt and US DOLLAR tumbling
reluctantplumber
⋅
So at the surface it seems the index is fairly valued, or am I missing something? We have seen the slow data from Q1, do we need validation from Q2, or do we make an assumption that the economy is slowing? The dollar will also be a big part of the calculation.