20131011 Moving Average Breadth
Another wild week for the markets as the Shutdown headlines started whipping the markets around a little more. The thing that stood out to me was other than the one big down day the bulls were holding up well. I also continued to pound the table here that the structure was not deteriorating enough for me to worry. Sure, the short term moving average readings were losing ground, but most of the 200sma readings were holding strong near or over 80. As I have stated before when the short term averages get weak and the longer reading stays strong you buy on the reversal. We got those this week. Like all signals, this one doesn’t work every time, but so far this year it has been rock solid. Industrials was a picture perfect scene this week with the 20sma below 20%, 50sma below 50% and 200sma holding strong over 70%. That was a sign to look for a reversal and we got it. The Universe chart readings were very close to this signal, so it wasn’t just Industrials.
I am also expanding how I use the universe this week. the first post on the subject can be found here. This will consist of various charts using the universe in an attempt to cut out the noise in the NYSE.
I will continue to post both the $SPY and custom index for a few weeks, but will probably drop the $SPY version eventually.
First, the Total universe of 1898 companies posted over the $SPY
Universe Composite Index
Next I split the universe into 10 custom broad sector indexes
Consumer Discretionary (325)
Consumer Staples (91)
Energy (132)
Financials (316)
Health Care (199)
Industrials (252)
Materials (148)
Technology (338)
Telecom (24)
Utilities (73)
These are custom indexes so you cannot invest directly in them, but there are plenty of ETFs available for each sector. For me personally this is another form of relative strength, just with a broader lens .
Good Luck! It is there for you to make.
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