Friday, September 24, 2010

Indicators that the market is healthy.

These are some of the main indicators I use to gauge if the market is healthy or not.

1) Stocks

a) I'm looking for strong fundamental companies, with good sales growth and earnings, building good technical consolidation levels.
b)Then these stocks breaking out of these consolidation levels on decent volume and holding their breakouts.

2) Volume

a) Looking for change from distribution to accumulation on High volume. (This indicates institutional buying)
b) Market breath: Rising stocks should be getting the majority of volume in a healthy market

3) Sentiment

a)As Jesse Livermore said: "The stock market is never obvious. It is designed to fool most of the people most of the time." Usually when people are raging bulls is at highs and when people are raging bears is at market lows.(Wall st analysts contrary indicators?)

4) Moving averages.

a) When the broad markets is above the 50 day moving average in a multiple of broad indexes ,this confirms the other 3 indicators. This is not a blind ’buy buy stocks when S&P gets above its 50ma’. Its just an addition to the check list!


Chris Heather

Market Technician


Manor House,








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