The market is still overbought

The New York Stock Exchange (or NYSE) Summation Index gives an indication about the breadth of The NYSE index.
It ‘s a momentum indicator.

We can add a moving average convergence/divergence indicator in order to look for buy and sell signals.
The signals are generated by crossovers of the MACD and the control line which is nothing else than a 9 period average on the difference between a 12 en 26 day average.

This summation index was developed by Sherman and Marian McClellan and is derived from the number of advancing and declining stocks in a given market. In fact it’s the daily accumulation of an oscillator based on this principle.

Apart from the original method used by the McClellans other versions exist. We use the following formula:

Summation index = 1000 + (10%trend – 5%trend) – [(10 x 10%trend) + (20 x 5%trend)] where
5%trend = 39-day exponential moving average of (advancers – decliners)
10%trend = 19-day exponential moving average of (advancers – decliners)

This market is not in a good shape and way overbought. So be careful in the comingweeks/months as this overbought condition can be reversed

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