The $OEXA200R Monthly (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money.
The weekly charts below are current through the week's close.
Weekly OEXA200R vs. S&P Comparison
According to this system, the market is now Tradable. The OEXA200R ended the week at 88%, down from 94% last week.
Of the three secondary indicators:
- RSI is POSITIVE (above 50).
- MACD is POSITIVE (black line above red).
- Slow STO is POSITIVE (black above red).
Background on How I Use This Indicator
The OEXA200R is a valuable metric used to accurately assess the state of the market in order to make profitable trading decisions. That is, whether we are in a bull, a bear or transitioning from one to the other, as well as market volatility and risk within each of those situations. Historically, it has also given traders a clear early warning signal of impending serious market downturns and later safe re-entry points. While not intended as a day trading tool per se it can certainly be used as background information by high frequency traders. Simply put, the OEXA200R gives traders the ability to identify the most opportune conditions within which to execute their various long, short or hold strategies.
Following a major market correction, the conditions for safe re-entry are when:
a) Daily $OEXA200R rises above 65% (I follow the Daily but do not publish the chart here)
And two of the following three also occur:
b) Weekly RSI rises over 50
c) Weekly MACD black line rises above red line
d) Weekly Slow STO black line rises above red line
Without the solid foundational support of two out of three Weekly secondary indicators it is unsafe to trade even if Daily OEXA200R edges above the 65% line. The market is considered safely tradable as long as Daily OEXA200R remains above 65% and two Weekly secondary indicators remain positive. Volatility and risk for long traders are relatively low. The trend is on their side.
Conversely, when Daily OEXA200R drops to 65% and / or two out of three Weekly secondary indicators turn negative it is taken as the conservative signal to exit all long positions, even if Daily OEXA is above 65%. Volatility and risk increase substantially. In the past, this has often been a "tipping point" condition presaging a substantial market drop.
For simplicity sake, just look for the notice in the "Interpretation" section above as to whether the market is either "Tradable" or "Un-tradable".
© John F. Carlucci