My 3 favorite market indicators

Each week end I step back and see where the market really is.  It's very confusing to listen to the talking heads on all the financial news channels so I use these 2 indicators to keep my head straight.  All of these indicators can be found on Barchart.

The first and I think the most important is the Value Line Arithmetic Index.  It a simple unweighted index that measures the change of approximately 1700 of the largest stocks covered by the Value Line Investment Survey.  These 1700 stocks constitute about 95% of the entire US stock market capitalization.  Most investors I've talked to invest a percentage of their money in each stock rather than weighting their portfolio by market capitalization.  This unweighted index of 1700 stocks gives me a better feel of the market than the weighted  and much smaller Dow 30 or S&P 500.

My chart shows the index against its 20, 50 and 100 day moving average and uses the Barchart Trend Spotter (tm) which is an indicator of the weighted results of Barchart's 12 technical indicators.

You can see from this weeks chart that the market has paused..

The next table shows how many of approximately 6000 stocks are trading above their 20, 50 and 100 day moving averages not only today but also yesterday , last week and last month.  A good way to see if the market is getting stronger or weaker,  Clearly the 20 day moving average shows the market is just slightly above average

Market MomentumSaturday, Mar 5th, 2011

Percentage of Stocks Above Moving Average 

Market Momentum		Advances	Unchs	Declines	20-Day MA	50-Day MA	100-Day MA	150-Day MA	200-Day MA
Today	-0.40%	1310	157	2765	53.78%	61.48%	71.99%	79.96%	81.33%
Yesterday	+1.69%	3430	88	714	61.53%	65.03%	74.64%	81.19%	82.32%
Last Week	+1.81%	3576	80	576	57.94%	62.74%	73.77%	80.93%	81.68%
Last Month	+0.30%	2191	130	1911	57.82%	65.95%	77.29%	82.49%	80.74%

My last indicator is the number of stocks hitting new highs versus new lows for various periods.  A indicator that tells how many stocks have broken out of their trading channel and in which direction.  The 1 month new high of 506 dividend by the one month new low of 310 is a positive 1.63 (506/310 = 1.63) which for me is a bullish sign.

Current New Highs/Lows

Current information as of Friday, Mar 4th, 2011

	Overall	NYSE	AMEX	Nasdaq	ETFs	OTCBB	Price <$10	Price >$10	Vol <100K	Vol >100K
1-Month Highs	506	243	44	219	154	85	146	358	135	371
1-Month Lows	310	121	25	164	33	62	171	138	114	196
3-Month Highs	345	171	30	144	95	45	90	253	76	269
3-Month Lows	117	45	11	61	18	22	69	47	31	124
6-Month Highs	317	154	28	135	78	27	79	237	68	249
6-Month Lows	49	13	5	31	13	8	38	11	11	38

I'm no genius but most investors think they are.  I do believe in the old adage "A rising tide floats all boats",  Before you try to find those stocks you think will beat the market look at these 3 indicators to see if you even want to be in the market.