Want more clues when day trading?

tenteddies

One of the indicators that is often overlooked is the New York Stock Exchange's Breadth Indicator.   

The $NYBR measures what is happening to about 1800 U.S. stocks on the NYA index and a few hundred foreign stocks.   

As in intra-day tool, it offers some valuable information relative to the breadth of the market.   I will often watch a 1 minute, 3 day chart and correlate it with the movement of the SPY.  

Take a look at this morning's chart ...

The first blue, vertical line shows what happened last Thursday.   You can see that the NYBR started off negative, but continued to trend higher until Noon time when it went flat.  And then, at 1:30 PM, the NYBR fell below our 80 SMA (Smooth moving average) and it was also NEGATIVE (below zero) at the same time.

That was the Red Flag for what was about to happen to the SPY as seen on the bottom half of the chart.   With the majority of the NYA stocks trending lower, that left little hope for the SPY to stay up.    The NYBR continued down the rest of the day and it hit a  minus 1000 level at 3:10 PM.    (You can often have some sharp down movement when trending below 1000.)

While the SPY was moving sideways, there was no context to compare what this meant relative to the number of stocks rising and falling at the same time.  Looking at the NYBR gives you such additional information that can be very useful.  

Last Friday, at  the open, the NYBR jumped to a 2000+ level indicating U.S. and foreign stocks were all moving higher.   It stayed that way, without a problem, until about 3:10 PM again ... and then it merged with the 80 SMA.   That was a caution level, where there was less upside potential likely compared to the inherent risk to be taken.

And then, this morning, the NYBR opened low, and quickly fell into negative territory.   The SPY fell with it, but note that the NYBR never did move down to the -1000 level ... instead, it started moving higher after 9:58 AM.   That suggested that anyone playing an intra-day short after that time were facing growing risks in the trade.

The chart below only goes until 10:12 AM, but as I am ready to post this update at 11 AM, the NYBR level had risen to -88.    If it moves to plus territory, that will be a positive influence on the market, and if it could move above the green SMA 80 line, then it would gain a lot of positive momentum.   If it remains below the zero level, that will be a drag on the market.

busywind

thanks for sharing!