The Golden Cross Index (GCI) and Silver Cross Index (SCI) give a significantly better image of market breadth than any advance-decline primarily based indicator. And, fairly than breadth, we consider them as giving an correct measure of participation — the share of shares collaborating within the up or down pressures driving the market.
The GCI is a long-term indicator that tracks the share of shares in a given index which have the 50-EMA above the 200-EMA, the venerable Golden Cross. Beneath is a chart exhibiting the GCI for the S&P 500, Nasdaq Composite, and NYSE Composite Indexes. We take into account GCI readings above 70 to be bull market situations; between 70 and 50, correction territory; and under 50, a bear market. These ranges are considerably arbitrary and go away room for subjective interpretation. As you possibly can see, the Nasdaq Composite and NYSE Composite are deeply into the bear market vary. The S&P 500, whereas nonetheless above 50, is barely so and can most likely be a part of the opposite two quickly. Observe how the GCIs topped effectively forward of their worth indexes — as much as a yr or extra.
The SCI is an intermediate-term indicator that tracks the share of shares in an index with the 20-EMA above the 50-EMA, which we name a Silver Cross. Within the chart under, we’ve got the identical three market indexes with their SCIs. The SCI strikes extra rapidly than the GCI, and we are able to see how readily it responded to the March rally. Nonetheless, the SCIs are all under 50 and falling once more.
DecisionPoint has SCIs and GCIs for 21 market and sector indexes. The next desk exhibits the SCI and GCI (sorted by SCI worth) for every of them. This provides a transparent image of strongest to weakest index/sector by way of participation. As you possibly can see, all however 4 are at correction ranges, whereas 16 are at bear market ranges. Observe that Expertise is the SCI ranked second from the underside.
CONCLUSION: The Silver Cross and Golden Cross Indexes are wonderful indicators for assessing breadth and participation within the medium- and long-term. The broadest market indexes are exhibiting that upside participation by their elements is mighty skinny. The state of affairs is even worse for sector indexes. The S&P 500 continues to be barely above 50% stage, however simply barely. Extra promoting will certainly ship into the bear market zone.
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Carl Swenlin is a veteran technical analyst who has been actively engaged in market evaluation since 1981. A pioneer within the creation of on-line technical sources, he was president and founding father of DecisionPoint.com, one of many premier market timing and technical evaluation web sites on the net. DecisionPoint makes a speciality of inventory market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and weblog contributor.
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Erin Swenlin is a co-founder of the DecisionPoint.com web site alongside along with her father, Carl Swenlin. She launched the DecisionPoint each day weblog in 2009 alongside Carl and now serves as a consulting technical analyst and weblog contributor at StockCharts.com. Erin is an lively Member of the CMT Affiliation. She holds a Grasp’s diploma in Info Useful resource Administration from the Air Power Institute of Expertise in addition to a Bachelor’s diploma in Arithmetic from the College of Southern California.
