Below is a daily swing chart of the NYSE composite index (NYZ). This daily chart shows the open, high, low, and close using Japanese candlesticks overlaid with the NYZ's daily total volume. In addition, it shows you the 4 day highs and lows. Highs are circled in green and lows are circled in red. These 4 day highs and lows identify swing points. Lastly, you should note that the accompanying daily volume is circled in the appropriate color. The reason swing charts are used is because some technicians use volume to assist them in indentifying strength or weakness at these swing points. The left scale is the volume scale and the right side scale is for the NYZ index prices.

Below is a daily chart of the SP500 futures closing price and the tick oscillator. For more details visit our webpage the NYSE TICK.

Below is a daily chart of the SP500 futures closing price and the tick indicator. For more details visit our webpage the NYSE TICK.

Below is a daily chart of the NYSE's market internals expressed as ratios. This chart compares the NYZ daily close to the 5 day sum of the NYSE's TRIN and our modified TRIN. The reason for the creation of our modified TRIN was due to the often misinterpretation of this widely used indicator.

The most widely used ratio is the TRIN, or ARMS index. Also known as the short term trading index, it compares two ratios. It compares the ratio of Advancing issues to Declining issues (AI/DI) and the ratio of the up volume to down volume (UV/DV). These two ratios themselves are combined to be expressed as a ratio ( (AI/DI) / (UV/DV) ), the TRIN. However, the two ratios are not intuitive and are often misunderstood. So the natural question is what is the ratio of the energy expended on stocks rising versus stocks declining from the previous day? To answer that, you would need to rearrange these 4 variables so that the a ratio of  up to down would be created. If you did this then this ratio would be easier to understand and subject to less misinterpretation. Below is a chart of the modified TRIN. It is represented by the following fomula ( (AI/UV) / (DI/DV) ).

Both the TRIN and the modified TRIN are summed for 5 days and plotted. First, notice that the both the TRIN and modified TRIN oscillate, but they oscillate opposite to each other. Second notice that the range of each indicator is different. Whereas the TRIN can range between 0 and 15, the modified TRIN's range is double the range of +15 to -15. Third, notice that the modified TRIN is easier to interpret. For example, if the ratio of energy going into rising stocks is greater than declining stocks then the modified TRIN rises whereas the TRIN declines. In addition, ratios that are range bound by the limit of zero such as the TRIN are misleading. For example, as the 5 day total TRIN moves lower from 4.3 to 2.9, it doesn't appear to move much and this small change is dismissed as an insignicant change. However as can be seen by the modified TRIN this small change has is actually a dramatic difference in the ratio of energy going into rising stocks versus declining stocks. This same move as expressed with the modified TRIN shows a change from 9 to 16 which is commensurate with actual event.

So as a technician, you can see that once a 5 day sum of the daily modified TRIN ratios exceeded +10, the market got a signal to move higher. These high modified TRIN readings showed the huge short burst of positive interest and energy in to rising stocks and prices subsequently rose. Now look at the TRIN and compare the values to the modified TRIN. First, you don't get the same impression. Where's the large spike to show the burst of interest? The TRIN moves slightly lower and presents a seemingly insignificant change lower. It just doesn't convey the perception of exteme interest in rising stocks as does the modified TRIN. So in summary, each rise off the lows of July 2002, Oct. 2002, and March 2003 came in two stages. First, there was a 6 day period of extreme interest in rising stocks and rising prices. This initial wave provided the signal that higher prices were still to come. And the second stage consisted of the slower paced rise in prices as the interest in rising stocks swithced to declining stocks.

Now, notice that the number of days between these modified TRIN spikes seems to be doubling. Although there is no statistical evidence of a correlation, the time between the first spike and the high was 16 days. The time between the second spike and the subsequent high was 31 days, and currently (6/4/03), it's been 51 days since the third spike. Curiously, the ratio of time between the last two spikes and the their highs is 31/51 = .608 which is close to the Golden ratio, or Fibonacci ratio of 0.618! Perhaps a turning point is in the making.

Lastly, it has long been observed on Wall Street, and quietly held as a secret clue, that 10:1 ratios are significant. These extreme ratios are hunted and tracked by technicians by virtue of their rarity. Generally this 10:1 ratio is referenced to the daily data, but if we apply this rare condition to weekly data (5 day sum), this extreme ratio still applies. It is interesting to notice and make the same inferential correlation with the 5 day modified TRIN. Here's a statement that has some merit. When the modified TRIN reaches 10:1, either plus or minus, the trend will continue. In the chart below there were two -10 spikes and three +10 spikes. On each occasion the market made a lower low or higher high within three months, marking a continuation of the trend. In addition, if the we arbitrarily reduced the range from +/- 10:1 to  +/- 9.5:1 then three more signals would be generated. Each of these would have signaled a continuation of the existing downtrend. So an investor (in these uncertain times) could have used this relatively obscure fact to make eight low risk trades in 18 months and these profitable trades were essentially risk-free because the investor would be merely following Wall Street's heels. Contrary to the buy and hold strategy which created huge paper losses, these momentum trades would have all produced positive gains and limited the investor's time in the market thereby limiting the risk to other factors and losses.

Below is daily chart of the NYZ closing price and the Advance-Decline (A/D) line. The advance-decline line is a two part calculation. First each day's advancing issues figure is added to the declining issues figure to determine the net change for the day. The second part of the calculation is to calculate the cummulative sum of all of the daily net changes. The result is the A/D line.

The A/D line's value is in comparing the number of stocks (the number of symbols traded on the NYSE) closing higher for the day to the number of stocks closing lower each day. This effectively converts price into a mearsure of the number of stocks advancing versus the number of stocks declining. As you can see, during the market top of 1998 to 2000, the A/D was dropping and technicians were baffled by this. All kinds of reasons surfaced to discount the value of this market indicator and what it was telling investors. The primary reason that this wasn't useful anymore was because the NYSE's character had changed dramatically.

First, the number of stocks listed on the NYSE changed dramatically each year. Prior to the late 1990s, the number of issues listed on the NYSE was relatively stable. Second, the NYSE began trading ADR (American Depository Receipts), another word for trading foreign stocks. Third, the NYSE started trading ETF (exchange traded funds), or echange created baskets of stocks called indexes. Fourth, the total volume of stock issued exploded. This served the purpose of paying employees with stock rather than paying employees in cash. This increase in number of shares issued by each company increased the supply of stock and diluted the company's value per share. This made it harder for company's stock prices to rise. As a result of this increase supply of stock, the percentage of common stocks issued compared to all issues listed (common, preferred, ADRs, EFTs) dropped which decreased or diluted the relavance of the A/D line.

Market technicians use this to confirm the market's trend. Both price and the internal nature of the number of stocks advancing or declining each day should move in tandem. When they don't, this is called divergence. When a technician sees divergence, they immediately suspect a change in direction of the market. Of course, the question is which of the two items (price or A/D) leads the other? Most technicians admit that the A/D line lags price, but this isn't always true. A true "Bull would view this chart as a sign of strength because as the market has been making lower lows, the number of issues has been rising which will set the stage for the next leg up in price. This chart is showing you that investors are biding up more stocks as prices move lower which is showing interest in buying. In the past this event has proven to be positive, but what if investors are speculating, or "bottom fishing", and they're wrong? As you can see, although the A/D line is rising, prices are still making lower lows.

Below is a daily chart of the NYZ along with unusual views of the Advance/Decline ratio and the Up/Down Ratio. This busy graph has as the legend shows 6 line plots based on the daily closing price and volume figures of the NYSE. First, the daily close of the NYZ and the 125 day moving average are plotted. This 125 moving average represents approximately 6 months. Next,  the advance/decline (A/D) ratios from each trading day are summed. This A/D ratio is simple the advancing issues divided by the declining issues on the NYSE. Then a moving average of the quarterly, and half-year, sum of these ratios was plotted. These same quarterly and half-year moving average calculations were performed on the up/down (U/D) volume ratio which is simply the up volume divided by the down volume from the NYSE.

These internal statistics show a disturbing divergence. First, the A/D half-year line. It has been rising despite declining prices. This divergence is showing that investors are "buying the dips". Second, the U/D half-year line is showing a huge influx of up volume, or buying. However, this huge amount of buying which is greater than that last witnessed during 1997 still isn't enough power to drive prices higher. So the market is churning and building up an enormous amount of power for the next big move. Typically, buying causes prices to rise and the fact that prices aren't rising isn't a good prognosticator for future prices. You can see that both on a quarterly and half-year basis up volume is at historical high levels but price isn't rising with it. As a matter of fact, price hasn't been able to rise above resistance levels and break the downtrend.

Below is a daily chart of the NYZ alonge with its quarterly and half-year moving average of the percent price changes. This chart shows you the percent change in price on a quarterly and half-year basis. The reason for this chart's creation is to better understand the above chart. Notice on the left side of the chart above that there was a huge amount of buying but price seemingly isn't moving up or breaking the downtrend. Well, the chart below shows you that buyers have been making record amounts on their investment. So inspite of what the chart looks like, investors earned 40% in the last quarter and in the last 6 months. So unless more buying occurs to propel the market above the current resistance levels in an effort to break the downtrend, the savvy investors will begin to take their +40% profits and the market will go lower as selling due to profit occurs. The point is that according to this chart, it would be normal for the market to go lower after a +40% gain in prices and retrace a little bit. The problem is that if profit taking escalates into outright panic selling, prices will break lower and a lower low will be in the future. Remember that the chart above showed you that a record amount of buying has already occurred and the market hasn't been able to lift itself above resistance levels nor break the downtrend, so odds favor prices breaking lower. So, now let's go back a step and explain the the chart below.

First, the daily closing price of the NYZ is plotted. Next, you'll see two other line graphs. These represent the 62 and 125 day sum of the daily percent changes. The 62 day sum represents the quarter and the 125 day sum represents the half-year. The left scale shows the percent from +40 percent to -40% and the right scale shows you the price of the NYZ index. Notice that the highest percent change on a quarterly and half-year basis is under 30% and the lowest percent change is -30% which just happened recently. Also notice that market tops and bottoms tend to coincide with one or both of these quarterly and half-year highs and lows. Now look at the fact that the market bounces primarily between +15% and -15%. Plus notice the declining trend of these two line plots. Then take notice that the percent changes are in the negative zone for longer periods of time. Lastly, don't confuse these plots with rate of change plots. These plots differ from rate of change plots because these plots sum the percent changes of both up and down days throughout the period whereas a rate of change plot shows you the difference between the first and last day of the period being determined.

To determine the amount of change in the price all you have to do is subtract one value from another and you'll have the net change in percent of the move. For example, the 9/11/01 low shows that the NYZ price was at quarterly and half-year minimum price of -20%. Then in Jan 2002 the market moved on a quarterly basis to +15%. This was a +35% move for the market, and as you calculate the net change from the major tops to bottoms you'll see the 35% is one of the largest move on record. So the market backed off in price as investors took some profits and then the next high coincides with the half-year high in Mar 2002. Here the longer term investors took profits and left the party before the market dropped precipitously to historic record lossess of -45% (from +15% to -30%). As you can see, the 2002 decline was the worst percentage drop the market has seen in 9 years.

Below is a chart of the NYSE composite index along with the 5 day NYSE Trin. Low values indicate closing or exiting long positions. High Values indicate closing short positions.

Below is a chart of the NYSE composite index along with the 12 day NYSE Trin. High and low values here tend to mark turning points in the market. Again, low values indicate closing or exiting long positions. High Values indicate closing short positions.

Below is a very complicated chart of the daily NYZ. As the legend shows there are 10 lines on this chart. This is because all of these indicators are gauging the strength of the price movements. First there a line plot of the daily NYSE closing prices and its 200 day moving average. The 200 day moving average is widely used as the yearly moving average despite the fact that it is really a 10 month moving average. This moving average is a major technical indicator and has real significance. Note the angle of the line and the relative position of the closing prices to it. First the angle of the line is pointed down and the prices are below this line. Less aggressive investors will wait for the line to point up before buying and then only buy dips in prices provided that prices are above the line. Currently, sellers are in control as the line is pointed down and prices are still below the line. Note that prices are getting closer to the line and that this line will be tested for resistance.

Next is the brown line that shows you the 5 day total of the up volume/down volume ratios. This identifies periods of extreme buying and extreme selling. As you can see, this 5 day ratio tends to be range bound despite having no set limits. What this implies is that buyers and sellers get exhausted. They don't have unlimited amounts of money, so buying and selling doesn't continue at an extreme pace for very long. Also, worth noting is that extreme buying are generally followed by rising prices and that rising prices tend to continue after the extreme buying has abated. Note there was only one exception, the Jan. 2003 high when prices fell quickly after the buying stopped (war jitters). Lastly, notice that buying spikes and then drops off while selling doesn't spike down. This assymmetric quality of this indicator is due to the summing of small fractions or ratios. When heavy selling occurs the ratio of up/down is quite small but the value never goes negative. So, heavy selling is represented by a series of days with low values that appear as a flat line and heavy buying  appears as peaks. Finally, look carefully at the buying spikes. These occur somewhat regularly on a quarterly basis and demonstrate that investors are buying the dips. The problem with this thus far, is that the trend hasn't changed up yet. None of these extreme buying spikes has propelled the market to change direction, yet. Notice that with each buying spike the number of points the market was able to rise decreased. Particularly notice the buying spike in Jan. 2003. Even with all of this buying, it hit resistance and failed to close above the 500 level. Then in Mar 2003, the market got another buying spike. It ran up to the 470 resistance level and stopped again. This made a lower high and currently confirms the downtrend.

NYSE 5day sum of Up volume/Down Volume Ratio. The NYSEUpDnVol Oscillator is our own indicator. This indicator was an attempt to spot strength and weakness in the market but was discovered to be a valuable oscillator. This oscillator compares price and volume and displays the market's current position in relationship to the market's theoretical maximum buying and selling. Notice how the blue line is confined within the two bands: maximum buying and selling. When the market gets near these boundaries, market turns are more likely. Also if the blue line is above the 3 simple moving average prices tend to move higher. Conversely if the blue is below the 3 simple moving average, prices tend to move lower.

The Accumulation/Distribution line represents the price multiplied by the volume. Where price is converted into a ratio or percentage. This ratio is calculated using the following formula: (Close-Open)/(High-low) and measures how far away the close is from the open in percent. Note that the result can be positive or negative depending upon where the close is in relationship to the open. Also note that each day's value is dependent upon two factors. One is the day's volume and the other is the percentage of the range between the open and close. So large price movements from the open mean that more of the day's volume was related to the change in price from yesterday. Another implication of how this indicator evaluates changes is to note that a high volume day in which the open and close are the same price would translate into a 0 value. Basically, the market was "spinning its wheels". There was alot of turnover but nothing really changed. In candlestick charting, these days are called "dojis" and translate into english as spinning tops. So this has long been recognized as an imminent sign of change - price reversals are likely. This usually means either distibution or accumulation was occurring depending on the current trend. Another situtation that could occur is when two seemingly different types of days actually produce the same value. For example, one day there is a large price move with little volume  and on another day there is a small price change but on tremendously high volume. These two days could be mathematically equivalent according to this indicator despite the fact that these two days would appear to indicate two different forces are at work. In addition, note that this calculation doesn't use the true range or references yesterday's close. There is also a 13 simple moving average of this Acc/Dist line. Lastly, notice how quickly the Acc/Dist line moves from one extreme to the other. This shows you the constant struggle between the "bears" and "bulls". There's always buying and selling, or accumulation and distribution.

Another plot is the 13 period Range Expansion Index (REI13). This simple price indicator uses a complex calculation that was developed by Tom DeMark and essentially compares new highs and new lows. This was included to demonstrate how closely this price only indicator matches the volume dependent indicators. The disadvantage to this REI13 price only indicator is that it lages the volume dependent indicator. This means that volume leads price in most instances. As evidence, compare the peaks of the light blue line and brown line to the peaks of the REI13 and you'll see that the volume dependent indicator peaks first and turns before the the REI13. This is clear evidence that you should be using at least one volume dependent indicator to help you spot short term market tops and bottoms.

Below is chart of the NYZ Down/Up Volume ratio. This chart only has two line plots: the NYZ daily close, and the sum of 5 days of Down/Up volume ratios. This 5 day sum of Down/Up ratios is a simple moving average of the NYSE down volume divided by the NYSE up volume. This is exactly opposite of the 5 day sum of Up/Down volume ratio described in the chart above. The reason for this chart is to show how much selling is occurring and to show you the strength and power of the down volume. As was described in the explanation of the chart above, ratios are quite useful but when the fractions get really small the 5 day sum approaches zero. So when you look at the Up/Down ratio, you only see spikes when there's an enormous amount of up volume, but when there's an enormous amount of down volume all you see is a flat line near zero. So the Up/Down volume ratio showed you the power and strength of the buying but not of the selling. Now we're going to flip the ratio upside down in a manner of speaking and show the power and strength of the down volume.

On this chart the 5 day sum of the Dvol/Uvol (D/U) ratio shows you the strength and power of the down moves in the NYZ. Buying is indicated when the D/U gets to a low value of around 10 and extreme selling occurs around 100 using the left scale. Notice that the waves of selling seem to be range bound despite the fact that there are no limits to the amount of selling that can take place (please note that NYSE's trading limits do not limit the volume of selling but only halt or pause the price movement momentarily. Only 10 minutes in most cases. Whether you get a fill is a different matter. Also on panic selling days, the uptick rule imposed by the NYSE does interfere with your ability to get filled and directly responsible for the fast and wild intraday girations as specialist try to unload the stock that they have to buy.).

So looking at this indicator you can see that down volume spiked many times. In particular, look at the two down volume spikes in March 2003. The first spike was greater in strength at the lows of 9/11/01, July 2002, and Oct 2002 but it didn't break the previous low set in Oct. 2002. It did make a lower low from Feb 2003 but the change in price from Feb. to Mar. 2003 wasn't nearly as great as it was at the other significant lows. Next look at the second low in Mar. 2003. It too was greater in strength than was exhibited at the other significant lows, but this time prices were higher and investors were still selling in droves. It also shows that there is strength in the market when all that selling gets absorbed and prices don't fall. For example, the first March 2003 spike should have had enough power to break the lows of Oct. 2002 but it couldn't. During the second wave of extreme down volume in March 2003, investors sold again but buyers gobbled up the shares.and prices held up amidst all this selling. Currently, as shown in the other charts listed on this page, there's an enormous amount of buying going on since July 2002. Buyers outnumber sellers right now, and they are apparently accumulating stock at these price levels. But the buyers aren't yet strong enough or not yet vigorous enough to change the market's direction and this is setting up the makings of a big move. There's a big "bet" that the market is going higher because the last two down volume spikes in March 2003, which are historically stronger than the spikes that occurred at the significant lows, are getting totally absorbed and they're having only having a minor impact on price.

As you can see, these extreme spikes in the past were accompanied by large price moves to the downside but those in March 2003 didn't have the same affect. So something big is brewing and the large triangle pattern from July 2002 to March 2003 of the NYZ only confirms this will be a big move coming. A conservative investor will wait for the price breakout or breakdown before investing while an aggressive investor or speculator will committ before the move occurs. The million dollar question is will more buyers enter the market or have the current buyers exhausted themselves? The recent price action shows that the buyers are still at it,  but the historical charts shown above indicate that the buyers will exhaust themselves real soon. So if the market fails to lift higher and soon, these buyers won't stick around. They will gladly take a small gain and bailout. These buyers that were accumulating stock since July 2002 will begin to unload, or sell their shares, and a new massive wave of selling will certainly have enought fuel (stock volume) and energy to make new lows.

If you'd like to hege your bet, using an option straddle in this situation would make the most sense as prices get confined and coiled up in the triangle. This way you are assured of participating in the next large move without worrying about being a "psychic". Buying calls will win big if prices rise and buying puts will increase in value if prices fall. But as always with options, timing is everything. So if the move occurs after your options expire then you lose big becuase both your calls and puts become worthless. But if the market moves one way or the other then you win with half of your position and lose with the other half. That's why it's called hedging. You're giving up some of your gains for the benefit of insuring yourself of picking the wrong side of the market move. So you'll make money but not as much as if you stuck your neck out and bet the whole amount on one direction. If you don't know this already about options, timing is more critical when purchasing options than being right, so consult a professional before buying options.

Below is a chart of the 13 day sum of the NYSE Advancing issues and Declining issues. Here the closing values and not the ratios for the Advancing issues were added and the same was done to the Declining issues value for the NYSE. Then the difference were calculated. In addition, the 100 simple moving average and 100 period standard deviation was determined and plotted. Turning points in the market tend to relate to the 13 day sum reaching these boundaries.

Below is a chart of the NYSE Advancing issues Declining issues Ratio. In this graph we summed the daily ratios of the Advancing issues and Declining issues and not the daily values. It's interesting to note how this market indicator tends to be range bound when there is no boundary. Investors are free to buy and sell as much as they like, but in reality, exhaustion sets in.

Below is a chart of the NYSE cumulative volume. This unusual presentation shows the intraday volume levels at the 1 minute level. This chart shows the total volume as well as the up and down volume for the day along with the NYSE composite index. Now you can see why prices reacted a particular way due to the interplay of up and down volume.

Below is another view of cumulative intraday volume at the 1 minute level. This chart shows the net volume by differencing the down volume from the up volume.

Below is yet another view of the 1 minute cumulative intraday volume. This is our own uniquely developer intraday trading indicator known as the 'DUD' (for Differential Up Down Volume). Notice how it spots intraday turning points.

 Below is a summary of the most actives from the 3 major US exchanges: NYSE, AMEX, NASDAQ (75 stocks). The plots below show the number of stocks that are up/down each day along with a plot of the cumulative sum of the daily net total. These are plotted along with the New York Composite Index.

Below is a chart of the cumulative sum of the daily percent changes of all of the most actives from the 3 major US exchanges: NYSE, AMEX, NASDAQ (75 stocks). In addition, there's a plot of the daily net percent changes along with the NYSE composite index closing price.

Below is a daily chart of the NYSE composite index closing price and the 3 Exchange (NYSE, NASDAQ, AMEX - 75 stocks) Most Active cumulative sum of the daily Net Volume. In addition, there is a plot of the daily volume of the 3 exchange Most Actives.

Below is a daily chart of the NYSE composite index closing price and the 3 Exchange (NYSE, NASDAQ, AMEX - 75 stocks) 4 day sum of the Price/Vol Oscillator. This oscillator is the product of the up stocks percent price change multiplied by the up volume, and the down stocks percent price change multiplied by the down volume, and the net percent price change multiplied by the total value.

Below are three charts that take an inside look at the NYSE's internal statistics on an intraday basis. The changes in these characteristics are analyzed to show you the difference in how investors are reacting in the morning versus in the afternoon.

Below is a daily chart of the NYSE composite index (original version) along with the money flow plots. Although this a daily chart, it requires intraday data to determine these plots. The prices at the open and at 10:00, 10:30, 15:00. 15:30, and 16:00 were used on full trading days and on half days (near holidays) the prices from 12:00, 12:30, and 13:00 were used for the last hour of the day. Money flow simply compares the price changes in the morning to the price changes in the afternoon. It is widely accepted that the smaller investor reacts to the news and places their orders in the morning while the professionals digest the news and respond in the afternoon.  Below are are plots comparing the first hour's price changes to the last hour's price changes along the half hour price change plots. In addition, for reference the daily price changes are also provided which shows the the NYZ index relative to the start of this chart 11/16/01.

Notice how the much more the prices dropped in the morning as compared to the afternoon. This indicates that professionals were buying the shares that smaller investors were selling.

Below is a daily chart of the Money Flow applied to the NYSE's up and down volume figures. Although this a daily chart, it requires intraday data to determine these plots. The prices at the open and at 10:00, 10:30, 15:00. 15:30, and 16:00 were used on full trading days and on half days (near holidays) the prices from 12:00, 12:30, and 13:00 were used for the last hour of the day. Here too the first hour saw much more negativity. There was much more down volume than up volume in the morning than in the afternoon. But despite the large amount of afternoon up volume, the daily net up/dn volume is still negative, or in the down volume area. Notice how much more up volume is entering the market in the afternoon. Also note that the date range is different than from the chart above. Lastly, notice the sharp increase in up volume in the afternoon since March 2003. Professionals have clearly shown a greater interest in rising stocks and they have driving prices higher.

Below is a daily chart of the NYSE's Advancing/Declining issues. Although this a daily chart, it requires intraday data to determine these plots. The prices at the open and at 10:00, 10:30, 15:00. 15:30, and 16:00 were used on full trading days and on half days (near holidays) the prices from 12:00, 12:30, and 13:00 were used for the last hour of the day. Here again the morning negativity can be seen but unlike the daily net volume which is still negative, the number of stocks rising in price each day is increasing. Notice the last uptrend since April 2003. Both the morning and the afternoon net changes have been positive indicating that stocks have been on the rise despite the recent increase in down volume.