Revisiting the Momentum Curve: Anticipating Market Turns

Back in 2014, I wrote about the Momentum Curve and how it is useful in visualizing market breadth and strength/weakness across different time frames. It's almost nine years later and I have maintained the Momentum Curve database. The dataset goes back to 2006 and captures the percentage of stocks in the SPX universe that are above their 3, 5, 10, 20, 50, 100, and 200-day moving averages. I then look at what the market did going forward, from 1 to 50 days, following various configurations of the curve. In June, I will be participating in my first webinar in quite a while, as part of the TraderLion conference. The session will be a group coaching session, in which attendees can bring in their questions and challenges and I will respond with best practices in evidence-based psychology and among successful portfolio managers. Preceding the coaching session, I will review the Momentum Curve and its application to the present market. This will offer a nice illustration of how quantitative analyses can great aid our discretionary trading judgement. As it happens, we recently (on Thursday) hit a point at which fewer than 40% of stocks were trading above their 3, 5, 10, and 20-day averages. Out of over 4200 days in the database, this has occurred 621 times. Over every forward time frame, from 1 to 20 days out, the market has--on average--displayed superior returns. For example, the average next twenty-day return following the oversold occasions has been +1.42% vs. +.55% for the remainder of the sample. Indeed, we did see a nice trend day higher on Friday. As the initial article indicates, these analyses provide hypotheses, not firm conclusions. If we observe a strong historical tendency for a move and then current market behavior follows that tendency, we have the possibility for a trade with the proverbial wind at our back. I'll offer other examples and applications in the webinar; stay tuned! Further Reading: The Psychology of Quant Analysis Using Breadth to Track Market Cycles . [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Urgent: Top 7 AI Stocks to Watch and Profit from in 2023]( Time is of the essence in the stock market, and we have an urgent message for you. The AI revolution is here, and it's happening right now. The companies that are leading the way in AI are poised to make enormous profits in the years to come.[Don't Waste This Opportunity]( By clicking the link you are subscribing to The Wealthiest Investor Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy [Privacy Policy/Disclosures]( [Revisiting the Momentum Curve: Anticipating Market Turns](?site= Back in 2014, I wrote about the Momentum Curve and how it is useful in visualizing market breadth and strength/weakness across different time frames. It's almost nine years later and I have maintained the Momentum Curve database. The dataset goes back to 2006 and captures the percentage of stocks in the SPX universe that are above their 3, 5, 10, 20, 50, 100, and 200-day moving averages. I then look at what the market did going forward, from 1 to 50 days, following various configurations of the curve. In June, I will be participating in my first webinar in quite a while, as part of the TraderLion conference. The session will be a group coaching session, in which attendees can bring in their questions and challenges and I will respond with best practices in evidence-based psychology and among successful portfolio managers. Preceding the coaching session, I will review the Momentum Curve and its application to the present market. This will offer a nice illustration of how quantitative analyses can great aid our discretionary trading judgement. As it happens, we recently (on Thursday) hit a point at which fewer than 40% of stocks were trading above their 3, 5, 10, and 20-day averages. Out of over 4200 days in the database, this has occurred 621 times. Over every forward time frame, from 1 to 20 days out, the market has--on average--displayed superior returns. For example, the average next twenty-day return following the oversold occasions has been +1.42% vs. +.55% for the remainder of the sample. Indeed, we did see a nice trend day higher on Friday. As the initial article indicates, these analyses provide hypotheses, not firm conclusions. If we observe a strong historical tendency for a move and then current market behavior follows that tendency, we have the possibility for a trade with the proverbial wind at our back. I'll offer other examples and applications in the webinar; stay tuned! Further Reading: The Psychology of Quant Analysis Using Breadth to Track Market Cycles . 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