1. Investment Management
Technical Analysis
Unit 4

2. V.Prabakaran, Ap/MBA - Technical Analysis
Market Indicators
Like a technical indicator, a market indicator is a series of data points derived from a formula.
In this case, however, the formula for market indicators is applied to the price data for multiple securities within the market, instead of just one security.
Price data can come from open, high, low or close points for the securities, their volume, or both.
This data is entered into the indicator formula and the data point is produced.
V.Prabakaran, Ap/MBA - Technical Analysis

3. V.Prabakaran, Ap/MBA - Technical Analysis
Cont…
Unlike technical indicators, market indicators are not charted above or below the chart.
Market indicators are what is being charted, and as such have their own ticker symbols.
There are often many symbols that apply the market indicator formula simply to different markets.
For example, the $BPSPX and $BPNDX track the Bullish Percent Index for the S&P 500 and the NASDAQ 100 respectively.
V.Prabakaran, Ap/MBA - Technical Analysis

4. Few popular market indicators
Arms Index (TRIN) - A breadth indicator derived from the AD Ratio and AD Volume Ratio.
Advance-Decline Line - A cumulative breadth indicator derived from Net Advances.
Advance-Decline Volume Line - A cumulative breadth indicator derived from Net Advancing Volume.
Bullish Percent Index - A breadth indicator derived from the percentage of stocks on PnF buy signals.
High-Low Index - A breadth indicator that shows new highs as a percentage of new highs plus new lows.
McClellan Oscillator - A MACD type oscillator of Net Advances.
V.Prabakaran, Ap/MBA - Technical Analysis

5. V.Prabakaran, Ap/MBA - Technical Analysis
Cont…
McClellan Summation Index - A cumulative indicator based on the McClellan Oscillator.
Net New Highs - A breadth indicator showing the difference between new highs and new lows. Percentage, cumulative and smoothed versions can be used.
Percent Above Moving Average - A breadth oscillator that measure the percentage of stocks above a specific moving average.
Record High Percent - A 10-day moving average of the High-Low Index, which is a breadth indicator.
Volatility Index (VIX) - A indicator of implied volatility designed to measure fear and complacency.
V.Prabakaran, Ap/MBA - Technical Analysis

6. V.Prabakaran, Ap/MBA - Technical Analysis
How it works?
Market indicators are used in technical analysis to forecast market trends. Market indicators are ratios and formulas that explain current gains and losses in stocks and indexes, and furthermore, indicate if an index such as the S&P 500 will experience short-term or long-term gains or losses.
For example, the market breadth index is a commonly used market indicator that measures the number of rising stocks versus the number of declining stocks. An index of greater than 1.0 suggests a future rise in market indices. An index of less than 1.0 suggests that market indices will fall.
V.Prabakaran, Ap/MBA - Technical Analysis

7. V.Prabakaran, Ap/MBA - Technical Analysis
Thanks…
V.Prabakaran, Ap/MBA - Technical Analysis