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The E-Book of Technical Market Indicators
The E-Book of Technical Market Indicators
www.wallstreetcourier.com
The E-Book of
Technical Market
Indicators
by
Wall Street Courier
Version 1.1
office@wallstreetcourier.com
www.wallstreetcourier.com
Page
1
The E-Book of Technical Market Indicators
www.wallstreetcourier.com
Preface
The transparency of the American markets offers an array of indicators and allows
deep insights of prevailing sentiment. You find the activities of NYSE members like
specialists and floor traders, public and odd lot short sales, the Short Interest Ratio as well
as the large block transactions of the institutional investors published every week. Other
tools for technical analysis include trend indicators, daily advances and declines, daily new
highs and lows, volume, indices, put/call ratios and other useful information like Stochastics,
RSI, MACD, TICK and more. The problem is only that all these indicators contradict each
other most of the time. Countless books have been written on this subject, and no matter
how many will be written in the future: always be aware that there is no such thing as the
Holy Grail of the stock market. But some people are more successful than others and the
answer is quite simple:
No indicator is right all the time and you don't have to be right all the time. Just be
right a higher percentage of the time than wrong. Choose some reliable indicators and stick
to them. Don't follow some indicators for a while and switch to some others if they fail. Don't
be a technician in the first half of the year and a fundamentalist the next half. Be consistent
and disciplined in your approach. Don't abandon a good indicator because you think this
time everything is different.
It takes of course a lot of guts because the opinions of the most widely quoted gurus
of Wall Street are usually contrary to your indicators at that time. This is much easier if you
don't use margin. You will sleep a lot better if you buy fifty shares of IBM with the money
you can spare than two hundred shares on credit.
Happy Trading
Wall Street Courier
www.wallstreetcourier.com
Page 2
The E-Book of Technical Market Indicators
www.wallstreetcourier.com
Table of Content
Advance-Decline Indicators ...................................................................................................5
Advance-Decline Line ........................................................................................................5
Advance-Decline Ratio.......................................................................................................7
Upside-Downside Volume Ratio ........................................................................................8
Upside-Downside Volume Line ..........................................................................................9
Upside-Downside Volume Net Difference ........................................................................11
Advance-Decline Net Difference ......................................................................................12
Global Futures Advance-Decline Index............................................................................13
Global Futures Upside-Downside Volume Index..............................................................13
Market Indicators .................................................................................................................14
High-Low Differential Index ..............................................................................................14
High-Low Ratio ................................................................................................................15
Global Futures High-Low Index........................................................................................16
Global Futures Bottom Indicator ......................................................................................16
Cycles ..............................................................................................................................19
Large Block Index ............................................................................................................19
Short Term Trading Index (ARMS Index or TRIN) ...........................................................20
Trend Indicator .................................................................................................................22
CBOE Volatility Index (VIX)..............................................................................................23
Index Options Put/Call Ratio ............................................................................................23
Call/Put Ratio ...................................................................................................................24
Global Futures Put/Volume Ratio.....................................................................................25
Smart Money Flow Index .................................................................................................26
Global Futures Timing Indicator .......................................................................................27
Global Futures Market Timer Index..................................................................................28
Global Futures Fear Indicator ..........................................................................................29
Wall Street Courier Index .................................................................................................29
Global Futures Trading Index...........................................................................................30
Global Futures Speculation Index ....................................................................................31
Program Trading ..............................................................................................................32
Calendar Spread ..............................................................................................................33
Odd-Lot Differential Index ................................................................................................34
Page 3
The E-Book of Technical Market Indicators
www.wallstreetcourier.com
Short Sales Statistics...........................................................................................................35
The NYSE Short Interest Ratio ........................................................................................35
Odd-Lot Short Sales Ratio ...............................................................................................36
Floor Traders Short Sales Ratio.......................................................................................36
Specialist Short Sales Ratio.............................................................................................37
NYSE Member Short Sales Ratio ....................................................................................38
Public Short Sales Ratio ..................................................................................................38
Odd-Lot Balance Index ....................................................................................................39
Odd-Lot/Floor Trader Short Sales Ratio...........................................................................40
Global Futures Odd-Lot/Specialist Short Sales Ratio.......................................................40
Global Futures Public/Member Short Sales Ratio ............................................................41
Public/Specialists Short Sales Ratio ................................................................................42
High readings indicate heavy shorting by the public (the so called crowd) and therefore
bottoms, low readings indicate tops. ................................................................................42
Global Futures NYSE Member Trading Indicator .............................................................43
Sentiment Indicators ............................................................................................................44
Investor Sentiment ...........................................................................................................44
Commitments of Traders Report ......................................................................................46
Appendix..............................................................................................................................48
Dow Jones Industrial........................................................................................................48
S&P 500...........................................................................................................................48
Risk Statement ....................................................................................................................49
Page 4
The E-Book of Technical Market Indicators
www.wallstreetcourier.com
Advance-Decline Indicators
Advance-Decline Line
The Advance-Decline Line is a market breadth indicator and should be compared to
the other market indices like the Dow Jones or S&P 500. Daily or weekly NYSE data is
used in the calculation. Because the Advance-Decline Line reflects the action of the general
market, any divergences are watched closely by market technicians. As long as the Dow
and the Advance-Decline Line are moving in the same direction the trend will continue. If
the Dow makes a new high which is not confirmed by a high of the Advance-Decline Line,
caution is warranted. Vice versa, if the Dow makes a new low and the Advance-Decline
Line doesn't you should cover your short sales.
© WallStreetCourier.com
ADVANCE - DECLINE LINE WEEKLY
160000
140000
120000
100000
To calculate your own weekly Advance-Decline Line is very simple and you can
begin your calculations at any time. Just pick a large enough base number like 100000.
Then you calculate each week (or day) the difference between advances and declines by
adding the advances and subtracting the declines. If you have 1269 advances and 1457
declines on your first week, the reading of your newly created weekly Advance-Decline Line
would be 99812 (example below).
Page 5
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