Market Minds

Apologies in advance for the very busy chart. If you click on the chart, the data will be clearer, and the explanation below will help in making sense of the indicator. The basic logic of the indicator is contained in my prior post ; we’re looking at where each stock in a basket of 40 closes relative to its prior day’s range. If the stock closes above the high of the prior day, we label that stock as short-term bullish; if the stock closes below the low of the previous day, we label it bearish. That is because, day over day, we are accepting value at higher or lower price levels. If the stock closes within the prior day’s range, we label its short-term trend as being in a range. First look at the red line, which is the number of stocks in the basket qualifying with bullish readings. We see the liftoff–broad bullish momentum off the July lows–and now the dwindling readings as the market appears to be in a consolidation/topping mode. At the same time, we can see from the yellow line that the number of stocks with bearish readings has been creeping higher and recently has been exceeding the number of shares with bullish status

Excerpt from:
A Bottoms-Up View of Very Short-Term Stock Market Trend Status