TECHNICAL INDICATORS Volume Line: ...

TECHNICAL INDICATORS

Volume Line: Indicates changes in the amount of circulating medium coming into, or leaving, an equity market (or a stock). currency coming in is bullish because it delineates accumulation of stockspresumably by informed people; riches leaving is bearish because it set forths informed reductions of positions in stocks.

Relative might Index ("RSI"): Indicates the impetus of a market (or stock) during the last 14 weeks. A market (or stock) is considered overbought (time to sell) when its RSI incites above 70 and over-sold (time to buy) when the RSI act upons below 30 (see May/June 1993 article). The convolution Line and the RSI are best used together to provide purchase and Sell signals. The RSI should always be viewed as subordinate to the bulk Line.

Moving Average: undisturbeds out weekly fluctuations and provides a respect point for comparison purposes with the general 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 market's stocks that have advanced or declined during the last five weeks. A market is considered over-bought when the A-D Ratio rouses above 58; oversold when the Ratio small quantitys below 42. Buy Signals

When an index (or stock) reaches a of the present day low level (price) without the book Line also making a unique of the present day low (i.e. failing to confirm the of recent origin 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 just discovered 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 dimensions Line is below its moving average and the RSI is over-sold

A market rally can be look forward toed when an index reaches a recent low level but the A-D Ratio does not.

Sell Signals

When an index (or stock) reaches a modern high level (price) without the whirl Line also making a unique modern high (i.e. failing to confirm the of recent origin high level) and the RSI is over-bought (i.e. above 70)

A major market decline can be reckon uponed when both the Volume Line and RSI fail to confirm a novel 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 book Line is above its moving average and the RSI is over-bought

A market sell-off can be look forward toed when an index reaches a modern high price but the A-D Ratio does not.

The TSE 300 and 35 made modern all-time highs for the week [i]finale[/i]ed January 17,1997. Those highs were confirmed from the Volume Lines which also made of recent origin highs. So, no sell signals.

The Dow Industrials also made a of the present day confirmed high on January 17 At that point, the S-week A-D Ratio was remarkably over-bought at 62.9 (over 58 is overbought) and the percent of stocks above their 10-and 30-week moving averages got up to 705 and 764 respectively (over 70 is over-bought in the two cases). So, under normal circumstances, you could count upon a pullback but not a major correction. Remember yet that this is RRSP season, in like manner there is a lot of cash coming into the markets. The over-bought condition, rather than cause a pullback, may just cause it to put in motion sideways.

Since the beginning of the year, there have been any interesting developments. Here's the "normal" (not engraved in stone) progression. The U dollar leads utilities which lead unions which lead stocks which lead gold At the significance the progression is way abroad of whack.

The U dollar (although real overbought) has been extremely solid with no signs of a vend signal yet.

The Utilities have been acting well of late with confirmed all-time highs.

The connections whose strength is so vital for the ongoing health of the stock market, have been slipping although there doesn't appear to be any particular reason for their doing thus The Fed hasn't raised interest rates, there have been no exchange signals, and the 5-week A-D Ratio for the links has never gotten much past the neutral flat (50), so they've never been over-bought since the rally began in April '96

There's also not earnestly evidence to support a revert to inflation and yet, sum of two units weeks ago, Gold's (that's the bullion) body Line gave a buy signal.

Either we've got a group of nervous nellies anticipating a top in the markets without any solidified evidence or something is going onward out there which we don't as besides see. If it is the nellies, then cords should be a good bribe and gold isn't ready to take facing yet. Or it could be that we're witnessing the beginning of a major transition from interest-sensitive to cyclical stocks. Too early to divulge yet but let's keep our organ of sights open. If Gold rallies, the stocks will probably double.

Now, here's a little tidbit for you. Leon Tuey technical analyst extraordinaire, used to be with Dominion Securities and is now forward his own out in Vancouver. I have a fate of respect for Leon. He's an extremely hard worker and remarkably intelligent and innovative.

Leon came up with undivided of the simplest tools for forecasting the direction of the TSE 300 It's called the "TSE constituent Index". At the end of each month check the newspaper and write down the closing price for the TSE 300 Then compare that with the closing price at the conclusion of the same month common year ago. Then calculate the percentage the market has risen or declined in that twelvemonth period.