Introduction to Market Indicators

Market indicators, which often gauge group participation in a trend, are used to assess the health of a collection of connected equities. The group may consist of members of a market as a whole, a particular sector, or a broad index.

Market Indicators vs. Technical Indicators

A market indicator is a set of data points that are obtained using a formula, just like a technical indicator. However, when using market indicators, the algorithm is applied to the price data of several securities in the market rather than just one. The open, high, low, or closing points of the securities, their volume, or both, can provide price information. The desired data point is produced by entering this data into the indicator formula.

Market indicators are not plotted above or below the chart, in contrast to technical indicators. Since they are being charted, market indicators have their own ticker symbols. The same market indicator formula is frequently applied to multiple markets via a variety of symbols; for instance, the $BPSPX and $BPNDX track the Bullish Percent Index for the S&P 500 and the NASDAQ 100, respectively.

Market Breadth Indicators

The number or percentage of stocks in the group that are following a trend is measured by breadth indicators. The price data of the group’s stocks is usually the basis for market breadth indicators. For instance, the number of stocks in the group that saw price increases (referred to as “advancers”) vs those who saw price decreases (referred to as “decliners”) is used to compute the Advance-Decline Line. The difference between the proportion of equities that make new 52-week highs and those that make new 52-week lows is measured by the Net New 52-Week Highs indicator.

Popular market breadth indicators include the Advance-Decline Line, McClellan Oscillator, and Net New 52-Week Highs.

Learn More. For a complete list of market breadth indicators available in StockCharts, visit the Market Indicators page in investmentiq

Sentiment Indicators

Not all market indicators use price and volume to gauge market involvement. Investor sentiment, or investor sentiment indicators, gauge how optimistic or pessimistic investors are about the market. Compared to typical market breadth indicators, the data utilized to compute these indicators varies more considerably. Rather than using price and volume, they frequently employ a count of participants or the amount of money they are investing. For instance, the funds invested in bullish and bearish mutual funds are used to compute the DecisionPoint Rydex Ratio. The results of investor polls serve as the foundation for the AAII sentiment indices.