TECHNICAL INDICATORS Volume Line: ...

TECHNICAL INDICATORS

Volume Line: Indicates changes in the amount of coin coming into, or leaving, an equity market (or a stock). riches coming in is bullish because it shows accumulation of stocks-presumably by informed people; wealth leaving is bearish because it take the part ofs informed reductions of positions in stocks.

Relative vigor Index ("RSI"): Indicates the moment of a market (or stock) during the last 14 weeks. A market (or stock) is considered over-bought (time to sell) when its RSI instigates above 70% and over-sold (time to buy) when the RSI prompts below 30% (see May/June 1993 article). The tome Line and the RSI are best used together to provide pervert with money [i]or[/i] gain and Sell signals. The RSI should always be viewed as subordinate to the dimensions Line.

Moving Average: polisheds out weekly fluctuations and provides a respect point for comparison purposes with the passing from hand to hand level of the Index or the bulk Line. Calculated as the average of the last 30 weekly closing prices.

Advance-Decline Ratio ("A-D Ratio" ): Indicates the proportion of the markets stocks that have advanced or declined during the last five weeks. A market is considered over-bought when the A-D Ratio act upons above 58 %; over-sold when the Ratio pendants below 42%.

Buy Signals

When an index (or stock) reaches a modern low level (price) without the dimensions Line also making a unique strange low (i.e. failing to confirm the fresh low level) and the RSI is over-sold (i.e. below 30%)

A major advance can be wait fored when both the Volume Line and RSI fail to confirm a recent low for an index (or stock).

When the distance that the index (or price) has mov below its moving average is greater than the distance that the mass Line is below its moving average and the RSI is over-sold

A market rally can be rely uponed when an index reaches a of the present day low level but the A-D Ratio does not.

Sell Signals

When an index (or stock) reaches a strange high level (price) without the body Line also making a unique just discovered high (i.e. failing to confirm the strange high level) and the RSI is over-bought (i.e. above 70%)

A major market decline can be awaited when both the Volume Line and RSI fail to confirm a modern high for an index.

When the distance that the index (or price) has mov above its moving average is greater than the distance that the turn Line is above its moving average and the RSI is over-bought

A market sell-off can be reckon uponed when an index reaches a recent high price but the A-D Ratio does not.

he mass line of the TSE 100 Index (it's made up of the 100 biggest capitalization stocks) gave a exchange signal on October 3. That was enough to start a correction which doesn't appear to be through yet, despite the fact that the market is oversold with the 5-week A-D Ratio at 374% However, the AdvanceDecline Line and the without deductions New Highs (new highs minus strange lows) are still declining and, until they cast up, the market will have distress rallying.

The TSE 35's whirl line came close to giving a exchange signal along with the TSE 100 if it be not that has now rallied back to a novel high. The TSE 35 is a weighted average in which more [i]or[/i] less stocks have more weight (influence) than others. The of recent origin volume line high is for the greatest part due to the purchase of bank stocks which have the biggest weight in the average. If you expect at the average on an unweighted bases where no stock has any more influence than another, you will papal court that the volume line has not made a just discovered high and, for that matter, is still in a less degree than its 30-week moving average. The dimensions line gave a sell signal back in September and then aborted it (more onward that later). Well, on November 25 and 26 the venders got to the bank stocks big time. When the weighted average leads the unweighted, it is not to be trusted.

Toronto's Resource Index is also a major puzzle It's oversold but continues to decline and exhibit tos no sign of turning up over and above Gold, oil, lumber, paper, mining, and hanger stocks are all taking it onward the chin week after week and are upright areas to avoid for the importance So now the disenchantment with the banks doesn't leave often to hold the market up

Remember that Toronto does not act in isolation. The driving force is recent York and we must always be particularly aware of what's happening forward the "Big Board". Let's start with the fixed income area. Three weeks ago, the 3-month Treasury Bills' whirl line took a dive in subordination to its 30week moving average and the RSI has been in a downtrend since July That refer tos that the Federal Reserve Board may be getting ready to start raising shortterm interest rates. As a matter of fact, bill rates have been moving higher since late September.

The 30-year Treasury band volume line gave a betray signal when the bill rates started to determine up; that signal is still in force And the 10-year Canadas showed up with a vend in the fourth week of October, obviously in anticipation of a hike in interest rates which is already beginning. With the Loonie in similar bad shape, it will take more than a quarter of a point to hold it from continuing its relentles decline.