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Every Monday before open I do my weekly homework on the US equity market to keep myself in sync with the market. I use weekly and daily charts of S&P 500 index, momentum analysis on 104 Dow Jones subgroup indexes, 1-month New Highs – New Lows index of US stocks that measures new leaders and laggards in terms of amount and market cap ($T).
My analysis that looks at the chosen market breadth indicators for underlying strength or weakness, charts for trend and support / resistance levels, determines if the current market state as of previous week’s close is bullish, bearish or neutral. The conditions may change intraweek when new data comes in. This is not a prediction but a reactive analysis instead. Be sure to understand and manage your own risks.
Weekly analysis example
The indicators are explained here in italic.
Weekly analysis 28 Dec, 2020
Subgroups are bullish but upside momentum is weakening. (Green represents strong upside momentum, blue shows weak upside momentum. Red represents strong downside momentum, cyan shows weak downside momentum. Each bar represents previous week’s momentum of 104 Dow Jones indexes, over 52 it’s bullish and below -52 it’s bearish.)
Bull – Bear groups have come from overbought state to neutral. (The chart shows green groups with the subtraction of red groups for previous week, oscillating between overbought (65+) and oversold (-65) levels.)
New Highs have decreased while New Lows have stayed roughly same. (Green bar shows 1-month new highs of NYSE and US Nasdaq stocks for previous week, red bar shows 1-month new lows for these stocks. More new highs is bullish, more new lows is bearish.)
Cap New Highs have decreased a lot while Cap New Lows have stayed roughly same. (Green bar shows 1-month new highs in market capital – trillions of dollars – of NYSE and US Nasdaq stocks for previous week, red bar shows capital-based 1-month new lows for these stocks. More capital making new highs is bullish, more capital making new lows is bearish.)
The blue dotted line shows the ratio of new highs and new lows and its value is shown on the right side.
Long-term weekly chart shows uptrend, not overbought yet. Support to hold is around 3600 and resistance to break around 3700 for this uptrend to continue.
Short-term daily chart is also in uptrend but has gone sideways near its value zone (EMA) for a while testing the level. Last Monday the market fell intraday testing its EMA but rejected the lows, no more selling came in and the day closed up strong. Rest of the week the market consolidated in a narrow range. Break above 3700 would be bullish, break below 3600 bearish.
Current market state: Bullish (28 Dec, 2020)
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Disclaimer: This is not investment advice. The analysis reflects my opinion only. I do not recommend to buy or sell any financial assets. Every person is responsible for his or her financial decisions. Any financial decision may result in loss of capital.