The IBD General Market Indicators page gives you what you need to know about the stock market in one place.
An Overview Of The Stock Market
The main part of the page — a link is at the bottom of The Big Picture each day — are charts of the S&P 500, the Nasdaq composite and Dow Jones Industrial Average charts. They show volume, the 50-day moving averages and year-to-date performance. Volume helps measure the level of conviction among institutional investors, while moving averages show potential support and resistance levels.
But that's just the start. Overlays provide a deeper look at market conditions.
One way to measure stock market breadth is with the NYSE advance-decline line on the S&P 500 chart. The Nasdaq chart has its own A/D line.
The line plots the difference between the number of advancing versus declining stocks each day. An uptrending line shows positive stock market breadth, and vice versa.
The NYSE A/D line tends to perform better over time. That's because the NYSE's listing requirements are more stringent, resulting in a set of higher-quality companies.
A declining A/D line while the index is rising should be treated as a red flag. It indicates that fewer stocks are participating in the advance.
Put-Call Ratio Can Spot Market Tops, Bottoms
The put-call volume ratio measures the number of traded put versus call option contracts. A measure above 1.0 indicates more fear among investors because there are more bearish bets being placed. The ratio, plotted below the Nasdaq chart, shows its 12-month high and low for comparisons.
Use this as a contrarian indicator. A ratio above 1.15 indicates excessive fear in the stock market and often occurs when the market bottoms. Readings below 0.5% can indicate investor overconfidence.
The put-call ratio jumped to 1.61 on Dec. 29, around the time the major indexes bottomed. The market had a follow-through day on Jan. 6 that marked a market uptrend.
The ratio plodded along below 1.0 until the banking crisis hit in early March, causing it to spike just as the market hit a low on March 13.
Accumulation/Distribution Ratings
The major stock market indexes get an IBD Accumulation/Distribution Rating similar to stocks. The rating tracks buying (accumulation) and selling (distribution) for the last 13 weeks on a scale from A+ (most buying) through E (most selling).
Within the S&P 500 chart, you'll find a breakdown of most stocks in our database by Accumulation/Distribution Rating. Study the numbers and watch for shifts among the ratings to get a sense of the market's health.
The IBD Mutual Fund Index is the last chart on the General Market Indicators page. The chart, which includes a relative strength line, can serve as an gauge of stock-picking pros. An IBD committee reviews and updates the funds that make up the index periodically.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.
