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 charts below are current through this past week's close.
Daily OEXA200R past 12 months
Monthly OEXA200R since April 2007
Interpretation:
The OEXA200R closed out the week down 7 points at 80%.
Of the three secondary indicators:
- RSI is above 50 and positive.
- MACD has crossed and is positive (black line above red).
- Slow STO (black line) is above 50 and is positive.
Commentary
The OEXA200R hit a high of 89% on Tuesday only to drop to 80% after the pathetic unemployment news on Friday (a 6% drop on Friday alone). The two secondary indicators, MACD and Slow STO, are edging toward flipping from positive to negative. They're the "canaries in the coal mine" that forewarn a possible major drop by the primary indicator OEXA200R. The OEXA200R at 65% is the sell signal. We're not there yet and are probably due for another rebound to previous market highs before the down trend really takes hold once Operation Twist ends. The take-away is that the foundational secondary indicators are starting to decay, they're the first warnings of softness in the primary OEXA200R, which itself is the early warning indicator of a precipitous general market drop. However, even with softening indicators we're still in tradable territory and can expect to make a few more bucks on at least one more rebound. We're probably at the top of the mountain that we've been climbing since December and from here forward can expect an overall jaggedly horizontal to downward path.
