Wednesday, April 04, 2012

Market Momentum Index from Barchart has several tools to feel the pulse of the market.  A great site if you know what you are looking for.  The market momentum index is one such tool which is expressed as a percentage and is calculated as follows

The formula is:

  • 1) Calculate (price/previous - 1.0) for each split adjusted stock
  • 2) Accumulate the result from step 1) for approximately 4000 participating stocks
  • 3) Multiply the total in 2) by 100.0 and divide the number of participating stocks

Below is a link to the market momentum index chart (barchart symbol: $BCMM).  The spikes to the upside above 103 which indicates a strong  breadth thrust and is your chance to go long fundamentally strong stocks breaking out of good bases.  

As always use proper position sizing and stops to protect from losses.

market momentum index

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