Courtesy of Doug Short.
The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com that can be used to forecast conservative entry and exit points for the stock market.
The OEXA is used to find the "sweet spot" time period in the market when you have the best chance of making money. See Is This the Best Stock Market Indicator Ever? for a discussion of this technical tool.
The chart below is current through the February 3rd close.
After a major S&P correction, the conditions for safe re-entry into the market are when:
a) $OEXA200R rises above 65%.
And two of the following three also occur:
b) RSI rises over 50.
c) MACD cross (black line rises above red line).
d) Slow STO (black line) rises over 50.
Interpretation:
OEXA200R remained well above 65% all week and closed at 84%.
Of the three secondary indicators:
- RSI is above 50 and positive.
- MACD has crossed and is positive.
- Slow STO is above 50 and is positive.
Conclusion:
The market is tradable, enjoy it while it lasts.
The market is very tradable. But this could be the last gasp before a serious correction beginning mid to late 2012. Look for a possible drop to coincide with the historic S&P pattern that has a tendency to tail off in the 2nd and 3rd Quarters (see below). Add to that any number of negative catalysts that could occur around the same time: Greece, Iran, another U.S. credit down grade – take your pick.
In the meantime, OEXA200R at 84% gives investors plenty of slack. Enjoy it while it lasts!
Note: Stockcharts.com offers free access to the $OEXA200R indicator on a daily and weekly basis. The monthly view requires a subscription.
(c) John F. Carlucci
John F. Carlucci is a regular contributor to Advisor Perspectives and the author of "Ashes to Riches: How to Profit Spectacularly during the Economic Collapse of 2012 to 2022", published by Endeavour Press Ltd., and also available on Amazon.com.
