Tuesday, September 28, 2010

An Indicator Suggesting A Pullback for the NDX

Some indicators I haven’t discussed in a while are the Quantifiable Edges Volume Spyx indicators.  The charts are found on the top of the charts page every night.  The calculation for Spyx is proprietary, but basically it looks at volume on a relative basis across multiple securities.  When Spyx levels post extremely high readings it suggests an upside edge over the short-term.  Extremely low levels suggest a downside edge.  Moves below 0 or above 100 are especially suggestive. Monday we saw the Nasdaq Volume Spyx come in between -3 and -4.  Below is one of several studies from last night's Susbcriber Letter related to this low reading.  It shows what happens when an extremely low Spyx reading occurs while the market is making a short-term high.

Results here are strong and consistent.  Very low Spyx levels when the market is posting new highs have been greatly suggestive of a pullback in the past.  Spyx readings can be found every night in the Quantifiable Edges members section.  Gold subscribers may also download full histories of both S&P and Nasdaq Spyx.  Files are updated each night.