IBD MarketSurge packs charting, fundamental data, screening and other tools into a platform ideal for growth-stock investing. It also has some powerful stock market indicators that many users overlook.
Some of these indicators have long been part of IBD's market analysis. They remain on the General Market Indicators page that is linked to each day in The Big Picture column. But several other indicators are unique to MarketSurge.
Under the symbols GMIAA and GMIAB, MarketSurge plots the NYSE and Nasdaq advance-decline lines.
Nothing more fancy than the difference of up vs. down stocks in each index, the lines nonetheless provide a good reflection of stock market health. It is a measure of breadth, meaning how much the market is participating in an uptrend.
You want the advance-decline lines to keep up with index gains. A divergence in which the A-D line is flat or declining while the index is rising should be treated as a warning sign.
Stock Market Indicators Unique To MarketSurge
The 10-day moving average for the advance-decline line is also shown, which helps identify trend changes. This is not found on the General Market Indicators page.
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MarketSurge offers other daily market indicators under the symbols NYEXG and NASDQ, corresponding to the NYSE and Nasdaq exchanges.
On these charts, users will find the Short Term Overbought-Oversold Oscillator. It is a calculation that takes the difference of the daily 52-week highs and 52-week lows. The results are placed within a band of historic values and expressed as a percentage. It's basically used to see if an index overheats too quickly to the upside or downside.
When the oscillator climbs above +500, it indicates overbought conditions, which often indicate an index top or at least a pause in an advance. When the oscillator drops below -500, it often signals an index low, or oversold conditions.
The 10-day moving average of stocks up in volume and down in volume is plotted with a blue line (up stocks) and pink line (down stocks). This is another gauge of stock market breadth.
A good market will have more up stocks in volume than down stocks in active trading.
New Highs Vs. New Lows
The 10-day moving average of new highs and new lows is another way to examine breadth, this one looking at 52-week highs and lows.
"In a healthy market, you're always going to have new highs greater than new lows," David Ryan, former U.S. investing champion, said on Tuesday's "IBD Live" show. When new lows start to proliferate, it's time to be guarded.
For both moving averages, pay attention to times when the lines cross each other or when the lines shift in direction. Compare that with the main indexes, checking if these breadth gauges confirm or diverge from the market trend.
With MarketSurge, users can press the Control key and drag their mouse over a chart to draw trendlines. So you can draw trendlines on these indicators as another way to visualize significant changes.
The stock market top in mid-July showed how MarketSurge indicators flashed warning signs. The Short Term Overbought-Oversold Oscillator had climbed above 500 (1). The 10-day moving average of stocks up in volume had been easing since early July (2). And the 10-day average of new highs followed the Nasdaq into a new downslope (3), confirming bearish action.
