Tips for Analyzing the Stock Market

A lot of traders have a hard time figuring out what to do after a market has made a big run (like in recent years). The big question is, NOW WHAT ?


In a market like where we are a now…..

  • Do you have a plan or system you follow ?
  • Do you systematically track what market leading stock are doing ?
  • Do you look at basic market internals like market breadth, new highs and volume ?
  • Do you have a plan for protecting your gains ?

These questions above are what you should be asking if you want to be active with your investments. In markets like these, complacency is a killer. Who knows if the market will drop today or next week or next month but you need to pay attention to warning signs.

There are lots and lots of methods, indicators and sophisticated systems that people like to use to track market valuation or technical or sentiment readings for judging market tops and bottoms.

I wish I had the ultimate secret signal to calling market direction but I don’t.  Here are some charts and indicators that I like to look at. I use my broker platform some of these charts but below are the equivalent free places to get the information quickly. Generally the best advice is to stick with the trend until the market tells you otherwise but it is still important to track what is happening you in the market internally so you are caught off guard if the market tops.

Below are the main “core” charts I like to evaluate in order of preference :

Look at Major Index charts for price/Volume Patterns

Look for distribution days(major index flat/down on higher volume than previous day) like discussed in Investors Business Daily popular methodology of identifying market tops when seeing multiple distribution days within a couple weeks

Stock Market Internals :

(Look for divergences in these charts meaning if you see new highs in an index but new highs and advance/decline are lagging then market internals could be signaling negative divergences)

Quick charts overview of Advance/Declines and High/Lows for major indexes(you can click on each chart to see more details):$NYAD,$NYHL,$NAAD,$NAHL,$AMAD,$AMHL|D

Nasdaq McClellan Oscillator (great indicator to seeing overbought/oversold levels at +80> means overbought and -80> oversold – Notice it’s not showing overbought levels right now despite market up here ? )

NYSE McClellan Oscillator (Same comments as above for Nasdaq McClellan)

Market Sectors Performance

Keep an eye on how leading market sectors are performing. Here is a great sourcefor quickly seeing major market sectors performance and you can click on each chart to seeing the individual stocks within that sector

Sentiment Indicators

(Not as accurate for market moves but useful information)

CBOE Put/Call Ratio for extremes$CPC

VIX (Volatility Indicators) – awful for market timing but useful to seeing level of investor complacency after big moves.

Barrons Magazine Sentiment indicators page


The above charts are the main core charts and as I mentioned at the beginning of this post there are hundreds of other indicators and signals people like to use. Overall, it is best to just pay attention to price and volume for the major indexes and follow the trend.

Surprising the market is calmly consolidating in a tight range on lighter volume after such a big move, which can be viewed as a positive. Although, it is good to be cautious when complacency is high(low VIX). Many market leaders charts have made big moves and need a breather. If you are find that you missed a moved then wait for proper entries and pay attention to what market sectors are doing well for the next breakouts. Also, market internals are showing some weakening breadth so we could see some needed pullback.

PS- If you read this far, then I highly recommend you check out a past post I wrote about a specific chart setup that I have found to be fantastic for timing the market for trend trading.

Please Share below if you have an indicator you use or website you find invaluable for your market analysis.

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