One of the daily research data sets we calculate every night is from a computer run on every stock on the S&P 500 index.
During that analysis, we measure the Strength levels of each stock and do a count of how many had positive strength that day, and how many had negative strength.
Sounds simple, but the story it tells is very important to investors. Here is why ...
Think about it for a moment ... since there are 500 stocks on the S&P 500, then 250 stocks is the half way point. Therefore, if over 250 stocks are positive, then the strength of the overall index is positive. And if that continues to trend higher, then the market has to also trend higher. Upside trending movement can be seen by looking at the blue trend line on today's chart. (The opposite condition can be seen by looking at the red trend line that depicts how many S&P stocks have negative strength on the chart.)
So, looking at today's chart, the trend of positive stocks is good. What you see is an up trend because it has been making higher/lows and higher/highs.
That brings us to the challenge we have in front of us this week . If you look at the chart, you can see a rose colored support line under the positive stock line. That is the challenge test for this week . For the trend to continue up, the number of positive stocks must hold above that support and higher than the previous low set on January 13th. of this year. Otherwise, we will see a rocky market with profit taking and down movement.
FYI ... there are a number of other daily studies on the S&P that we post daily relative to this study on the Standard subscriber site. One of the other studies show's the number of Very Strong stocks each day. The importance of this number is that these are rally "feeder stocks". We call them that, because if their numbers are rising, then they pull the broad market higher. If their numbers are dropping, then they will pull the market lower.