Below is a chart of the $NYSI (NYSE Summation Index). "the Summation Index provides a longer range view of market breadth and is used to spot major market turning points. "(stockcharts.com)
To me this provides a pretty accurate indicator of turning points in the market. From DecisionPoint, we learn more the about the Summation Index.
To me this provides a pretty accurate indicator of turning points in the market. From DecisionPoint, we learn more the about the Summation Index.
"The direction of Summation Index movement, up or down, is an indication of whether money is moving in or out of the market. When the Summation Index moves below the Zero Line it is an extremely negative sign for the market and indicates that a long-term down trend is in progress and is likely to become more severe; however, it is also likely that a significant market bottom is a few weeks or months away. Once the Summation Index drops below the Zero Line, we should anticipate a bottom in the area of -1000 or below. Once that oversold Summation Index bottom has formed, it provides strong evidence that a major market bottom is in place.
Looking at the past declines and rallies in the market, one can gauge where the market is at this current time.
Each time we have had a major decline two things happen with the $NYSI. First when the $NYSI turned negative and declined past the Zero line, we had substantially declines in the market. Since May 19th, the index has not climbed back above the Zero Line.
Each decline has found a bottom when the $NYSI is below the -1000 line. Each bottom was also signaled by a bottoming in the RSI and STOCH crossing signal. The same can be said for each top of the market before a decline, the RSI signaled overbought and STOCH have crossed.
So looking at where the market is now, we have rallied off the Nov lows and the $NYSI is above the Zero line, the first time since April of 2008, before the market had its biggest declines. But the $NYSI, looks to be heading south towards the Zero Line. The RSI is overbought and the STOCH is at its highest level since the start of the bear market, but has crossed giving a sell signal. Although the SPY looks to be bottoming the $NYSI is not showing a sign of a bottom or being oversold. If we cross below the Zero line the market could decline significantly, breaking the November lows. If we are bottoming we need to see the $NYSI turn around and head north, not south for the winter.
