Insider Buying No review of the stock markets would be complete without some talk about insider buying, which can be an excellent leading indicator to the performance of particular stocks. If the top executives of a company are putting their own money into the company’s shares at market prices, with all they know about the […]

Comparing Averages Another way of getting a feel for the market breadth is to compare the market averages. The most obvious example of this is Charles Dow looking at both the Dow Jones Industrial Average and the Dow Jones Transportation Average to see if they were in agreement and confirming the trend. Divergence between these […]

Equivolume Charting Richard Arms was also responsible for creating a form of charting called the equivolume chart. If you remember, in module 8 we looked at candle volume charts, where the fatness of the candle body was proportional to the volume traded. In 1983, before candlestick charting had been introduced to the Western trader, Arms […]

Traders Index A trader called Richard Arms decided to combine the number of advancing and declining issues with the volume of advancing and declining issues. This indicator shows the ratio of the average trade size for declining shares to the average trade size for advancing shares, and is independent of the number of trades or […]

Trading Volume A third measure of the strength of the market is to look at the trading volume, and a common way to do this is by looking at the volume in advancing issues and the volume in declining stocks. This is called the upside volume and the downside volume. These can be shown as […]

New Highs and New Lows Another pointer to the condition of the stock market can be found in the new highs and new lows which are published on a daily and weekly basis. You can see these are published along with the other information, and they can be found on financial websites as well as […]

McClellan Oscillator And Index The McClellan Oscillator was invented to provide overbought/oversold indication based on the A/D lines. It’s worked out by taking the difference between two EMA’s of the advance-decline figures. The actual periods used are 19 days and 39 days. It oscillates around zero, with the extremes at +100 and -100. If it […]

Advances and Declines If you look in the Wall Street Journal, you’ll find a wealth of data about the markets on the previous day. Here’s a selection of the values that you can find — We’ll concentrate on the New York Stock Exchange (NYSE) data for this example. On this particular day, the DJIA had […]

Market Breadth Market breadth is used to determine the overall health of the market. But market breadth can be measured in a variety of ways. What it really means is the amount of force that is behind any price moves. This opens the question of what are the best ways to gauge the force. For […]

Module 13 – The Stock Market Introduction With the knowledge of technical analysis you now have, it’s time to look at the different things you can trade, and see how it works in each particular market. Before we get into discussing the more intricate details of derivatives, we’ll look first at the stock market, which […]