The Golden Cross Index (GCI) and Silver Cross Index (SCI) give a significantly better image of market breadth than any advance-decline primarily based indicator. And reasonably than breadth we consider them as giving an correct measure of participation — the proportion of shares collaborating within the up or down pressures driving the market.
The GCI is a long-term indicator and it tracks the proportion of shares in a given index which have the 50EMA above the 200EMA, the venerable Golden Cross. Beneath is a chart exhibiting the GCI for the S&P 500, Nasdaq Composite, and NYSE Composite Indexes. We take into account GCI readings above 70 to be bull market situations, between 70 and 50, correction territory, and beneath 50 signifies a bear market. These ranges are considerably arbitrary and depart room for subjective interpretation. As you’ll be able to see, the Nasdaq Composite and NYSE Composite are deeply into the bear market vary. The S&P 500, whereas nonetheless above 50, it’s barely so and can most likely be part of the opposite two quickly. Notice how the GCIs topped effectively forward of their value indexes — as much as a 12 months or extra.
The SCI is an intermediate-term indicator that tracks the proportion of shares in an index with the 20EMA above the 50EMA, which we name a Silver Cross. Within the chart beneath we now have the identical three market indexes with their SCIs. The SCI strikes extra shortly than the GCI, and we will see how readily it responded to the March rally. Nonetheless, the SCIs are all beneath 50 and falling once more.
DecisionPoint has SCIs and GCIs for 21 market and sector indexes. The next desk exhibits the SCI and GCI (sorted by SCI worth) for every of them. This provides a transparent image of strongest to weakest index/sector by way of participation. As you’ll be able to see, all however 4 are at correction ranges, and 16 are at bear market ranges. Notice that Know-how is SCI ranked second from the underside.
CONCLUSION: The Silver Cross and Golden Cross Indexes are glorious indicators for assessing breadth and participation within the medium- and long-term. The broadest market indexes are exhibiting that upside participation by their parts is mighty skinny. The state of affairs is even worse for sector indexes. The S&P 500 continues to be barely above 50% stage, however simply barely. Extra promoting will certainly ship into the bear market zone.
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Carl Swenlin is a veteran technical analyst who has been actively engaged in market evaluation since 1981. A pioneer within the creation of on-line technical sources, he was president and founding father of DecisionPoint.com, one of many premier market timing and technical evaluation web sites on the internet. DecisionPoint focuses on inventory market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and weblog contributor.
Erin Swenlin is a co-founder of the DecisionPoint.com web site alongside together with her father, Carl Swenlin. She launched the DecisionPoint each day weblog in 2009 alongside Carl and now serves as a consulting technical analyst and weblog contributor at StockCharts.com. Erin is an energetic Member of the CMT Affiliation. She holds a Grasp’s diploma in Data Useful resource Administration from the Air Power Institute of Know-how in addition to a Bachelor’s diploma in Arithmetic from the College of Southern California.