TA Market Health Gauge

2023年10月19日

The Market Health Gauge is designed to identify the “health” of the overall stock market. Healthy bullish conditions are when investors should consider being more aggressive and taking full or even overweight positions. Inversely, when conditions are poor, caution is advised. Some investors may choose to simply sit out when markets are not healthy and trending.

To achieve this, we use a combination of key trend levels, market breadth indicators, and internal measurements.

One is the net reading of new highs & lows. In a healthy market, the number of stocks making new 52-week highs should be greater than the number of stocks making new 52-week lows. The opposite circumstance is to see more stocks are making new lows. This represents a less healthy trading environment and therefore weighs negatively on market health.

The indicator also factors in the percentage of stocks across all major exchanges trading above or below their short and long-term moving averages. This gives a good measure of how much of the stock market is in an uptrend versus a downtrend. Instead of using an arbitrary number and requiring a set % of stocks to be above these key levels before giving a green light, this indicator looks at the trend of these reading. In a healthy market, we want to see broad participation from stocks, so the percentage of stocks in uptrends versus downtrends should be rising to produce bullish conditions.

Other key trend levels are monitored for the major index. SPY which represents the S&P 500 is used by default, but users can change the benchmark index in the indicator settings.

The Market Health Gauge will paint the background of the chart to display one of five readings:

Bright Green: very bullish
Green: bullish
No Color: neutral
Light Red: bearish
Bright Red: very bearish

In addition to the red/green readings to represent bullish or bearish conditions, we have also added yellow dots to signify potential turning points in the market.

One reading Ross likes to watch for potential bottom signals during pullbacks is the put/call ratio. When this ratio gets abnormally high representing an overly bearish sentiment in the market, stocks often bounce.

By adding a simple moving average to the put/call ratio to smooth out the readings, we have seen that readings above 1.00 typically come at the low (see chart below).




To alert traders when this happens, the indicator will paint a yellow dot on top of the Market Health Gauge. This is not a buy signal by itself, but dots showing up on the chart just before conditions improve, i.e. turn from red to light red or green, we view this as an even more bullish sign to get aggressive on the long side.

2024年1月17日

發行說明

Steel ticker symbol changed to show the U.S Steel ticker symbol.

2024年1月17日

發行說明

The Market Health Gauge is designed to identify the “health” of the overall stock market. Healthy bullish conditions are when investors should consider being more aggressive and taking full or even overweight positions. Inversely, when conditions are poor, caution is advised. Some investors may choose to simply sit out when markets are not healthy and trending.

To achieve this, we use a combination of key trend levels, market breadth indicators, and internal measurements.

One is the net reading of new highs & lows. In a healthy market, the number of stocks should be making new 52-week highs should be greater than the number making new 52-week lows. The opposite circumstance is to see more stocks are making new lows. This represents a less healthy trading environment and therefore weighs negatively on market health.

The indicator also factors in the percentage of stocks across all major exchanges trading above or below their short and long-term moving averages. This gives a good measure of how much of the stock market is in an uptrend versus a downtrend. Instead of using an arbitrary number and requiring a set % of stocks to be above these key levels before giving a green light, this indicator looks at the trend of these reading. In a healthy market, we want to see broad participation from stocks, so the percentage of stocks in uptrends versus downtrends should be rising to produce bullish conditions.

Other key trend levels are monitored for the major index. SPY which represents the S&P 500 is used by default, but users can change the benchmark index in the indicator settings.

The Market Health Gauge will paint the background of the chart to display one of five readings:

Bright Green: very bullish
Green: bullish
No Color: neutral
Light Red: bearish
Bright Red: very bearish

In addition to the red/green readings to represent bullish or bearish conditions, we have also added yellow dots to signify potential turning points in the market.

One reading Ross likes to watch for potential bottom signals during pullbacks is the put/call ratio. When this ratio gets abnormally high representing an overly bearish sentiment in the market, stocks often bounce.

By adding a simple moving average to the put/call ratio to smooth out the readings, we have seen that readings above 1.00 typically come at the low (see chart below).



To alert traders when this happens, the indicator will paint a yellow dot on top of the Market Health Gauge. This is not a buy signal by itself, but dots showing up on the chart just before conditions improve, i.e. turn from red to light red or green, we view this as an even more bullish sign to get aggressive on the long side.

2024年1月17日

發行說明

The Market Health Gauge is designed to identify the “health” of the overall stock market. Healthy bullish conditions are when investors should consider being more aggressive and taking full or even overweight positions. Inversely, when conditions are poor, caution is advised. Some investors may choose to simply sit out when markets are not healthy and trending.

To achieve this, we use a combination of key trend levels, market breadth indicators, and internal measurements.

One is the net reading of new highs & lows. In a healthy market, the number of stocks should be making new 52-week highs should be greater than the number making new 52-week lows. The opposite circumstance is to see more stocks are making new lows. This represents a less healthy trading environment and therefore weighs negatively on market health.

The indicator also factors in the percentage of stocks across all major exchanges trading above or below their short and long-term moving averages. This gives a good measure of how much of the stock market is in an uptrend versus a downtrend. Instead of using an arbitrary number and requiring a set % of stocks to be above these key levels before giving a green light, this indicator looks at the trend of these reading. In a healthy market, we want to see broad participation from stocks, so the percentage of stocks in uptrends versus downtrends should be rising to produce bullish conditions.

Other key trend levels are monitored for the major index. SPY which represents the S&P 500 is used by default, but users can change the benchmark index in the indicator settings.

The Market Health Gauge will paint the background of the chart to display one of five readings:

Bright Green: very bullish
Green: bullish
No Color: neutral
Light Red: bearish
Bright Red: very bearish

In addition to the red/green readings to represent bullish or bearish conditions, we have also added yellow dots to signify potential turning points in the market.

One reading Ross likes to watch for potential bottom signals during pullbacks is the put/call ratio. When this ratio gets abnormally high representing an overly bearish sentiment in the market, stocks often bounce.

By adding a simple moving average to the put/call ratio to smooth out the readings, we have seen that readings above 1.00 typically come at the low (see chart below).



To alert traders when this happens, the indicator will paint a yellow dot on top of the Market Health Gauge. This is not a buy signal by itself, but dots showing up on the chart just before conditions improve, i.e. turn from red to light red or green, we view this as an even more bullish sign to get aggressive on the long side.