A Different Way to Look at S&P breath

Hi Everyone,

iVIEWMarkets is new to Stockaholics and we hope we can contribute some useful free market analytics for everyone to use. Today we wanted to go over one of our favorite breath indicators called the Strong Buy to Strong Sell Ratio that everyone can access for free on our site, we are not selling anything. Its located here www.iviewmarkets.com/marketinternals and its called the Strong Buy to Strong Sell ratio.



Here is some insight on how we look at this information.

There are many ways investors can look at measuring breadth, some of the more commonly followed concepts are looking at the number of stocks within an index that are above a long-term moving average like the 200-day moving average (MA). Another concept is looking at the advance/decline line on a rolling moving-average basis. While these techniques are helpful, they are not very good in reducing daily noise and can provide many false signals.

One of my favorite breadth indicators is the iVIEWMarkets strong-buy-to-strong-sell ratio for the S&P 500. It helps remove a lot of that daily noise that the above-mentioned indicators fail to provide. Essentially, the ratio grades only stocks that are technically in the top or bottom quartile or considered a strong buy or strong sell based on relative strength and momentum factors.

Simply put, investors will want to become more defensive as the number of strong sells (red line) crosses above the number of strong buys (green line). Conversely, investors will want to deploy capital as the number of strong buys cross above the strong sells.