S&P500 Stock Index vs % of Stocks in the S&P500 > 200 dma

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There is a bearish divergence setting up for the S&P500             whereby the advance is only happening with fewer than 70% of the component stocks in the Index above their own 200 day moving average.

In the past when these divergences set up, it implied that profit taking was just around the corner. Given that the market just had a decent round of "profit taking", I think there is a different way to look at this divergence and structure, but it will be more clear as time goes on. For now, we can see that fewer and fewer stocks are driving the gains in the market. This could very well be the results of the weakness in Oil             Stocks. The market doesn't go up all together, but in stages.

The normal event to expect in the coming 12 months would be a correction where a sustained period of 1-3 months holds below the 50% level in the "%of Stocks > 200 Day Avg"

For now, keep an eye on everything and stay tuned to TradingView.

Tim 10/31/2014 1:45PM EST
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A quick suggestion if I may: Using "Line" instead of "Bars" as a chart style for the "% above" chart would make it visually easier to interpret.

timwest kws0807
I hear you @kws0807. I appreciate your suggestion.
It is supposed to look like this:
+1 Reply
2use timwest
Out of your conclusions, the index went all the way up, but the number of stocks is still lagging - so if the rest play's catchup, won't it mean new highs, and bull continuation?
Maybe you can still publish it so we can see what happened before. I never looked at this pair before, and it is interesting how the diversion is present even here. Was writing a huge question and then seen the answer in your chart :) im getting to understand your thinking more and more
this guy likes to put a lot of charts forward but I don't think any of them really work maybe 50% of the time
-4 Reply
2use tompower
Down voted until you post a better job ;) i personally learnt a lot from his charts.
+2 Reply
The guy has been shorting the biggest bull market since I've been here. Try out Sanjay Gupta, I find he's a better chart technician and he called the rally in the yen.
2use TomPower
Sandeep gupta has also posted a short for the market.
And i also called a run for yen-japan - i am not as experienced as tim is. It takes 10 000 hours, and i am yet to achieve those.
Wow, ok you got me there. Boy was he wrong on that one. anyway I was referring to this chart https://www.tradingview.com/u/Sandeep_Gupta/#/v/UF8GLMTO/
Listen I've been beaten up, so excuse me if I'm a bit tired, not trying to condemn anyone here. Just saying that anyone can post anything and make up a scenerio. I'm sure poor old TIm makes a good living.
+1 Reply
timwest tompower
Rough comment tompower, I am here. "this guy" - how impersonal. At least at 50% I am doing better than a significant chunk of the analyst community. To my own defense, if my winning ideas produce more profits than my losing ideas, then I am a winning trader. What matters most is the expectancy equation: Expectancy = P(Win)*(Avg Win/Avg Loss) - P(Loss). If you look at the trades I put out and run them through this equation, you'll see them in a different perspective. You can have a high P(Win) but if you risk too much to make your profit, then it doesn't matter.

Also: Did you see the bearish calls I made before the market drop? It's important to share what we all are seeing out there in the market and make our decisions. If you see something that refutes the chart, feel free to post it, but not 'after the fact'. If you see a way to take a long-side trade and label your risk, your upside target and your time frame, then by all means go ahead and label it and publish it.
+3 Reply
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