In this week’s Mullooly Asset Management podcast Tom and Brendan wrap up their talk about indicators. In previous weeks they have discussed long and intermediate term indicators. Long term indicators are a confirming indicator of where the market will be headed for the long term. Intermediate term indicators are used to tell us if we should be on offense or defense at the present time. They can apply to the market anywhere from a few weeks to a year into the future.
This week’s topic is short term indicators. These indicators can hint where the market is heading in terms of days or weeks. Many times the short term indicators spill over into the intermediate and long term indicators. The primary purpose of short term indicators is to determine entry and exit points for different markets. This means they can show us good points to get into certain markets, and good points to take money out of other markets.
There are five different short term indicators that we use at Mullooly Asset Management. The first is the bullish percent for all mutual funds. The bullish percent for all mutual funds has short, intermediate, and long term charts, so this indicator has been in our discussions for three weeks now. More indicators include the 50 day moving average and the 150 day moving average for the New York Stock Exchange. These averages are 10 weeks and 30 weeks respectively. We also look at the hi-Lo for the New York Stock Exchange. This is the number of stocks making new highs versus the number of stocks making new lows. The last short term indicator we look at is advance/decline. Advance/decline is the number of stocks advancing versus the number of stocks declining.
Like we do with intermediate and long term indicators we use these short term indicators to keep an eye on the X’s and O’s. We specifically look for buy and sell signals, and make our moves accordingly. These five indicators all move independently most of the time, but when they move together it can create a strong direction for the short term.
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