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 March 2 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:
The market is tradable.
OEXA200R remained well above 65% all week and closed at 87%.
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.
Commentary
The OEXA200R remains in healthy, tradable territory. Expect a moderate pullback in the near future but overall it is still giving us a green light. As for my prediction last week that the OEXA200R will drop below the 65% waterline by August / September, see Doug Short’s recent article Fed Intervention and the Market: New Update. Once Operation Twist, the Fed’s latest desperate “sugar buzz” action wears off in early summer, expect that nasty crashing feeling again — followed on cue by the lift off of QE3 in early fall to get the market revved right before the election. Eventually, ad hoc “Sugar Buzz Economics” won?t be able to defy mathematical gravity anymore. Until then, feel free to move about the cabin.
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.
