This indicator is based on long time market analysts Walter Deemer's research. Below is a summary of what the indicator is used for. In short it can be used to spot market reversals.
In short, when the 10 day NYSE Advance:Decline ratio breaches 1.97, the market has achieved break away momentum. When the 20 day ratio achieves a 1.72 ratio this can be a "good" signal even if when the 10 day has not achieved a 1.97 ratio.
In addition to the NYSE, you can toggle NASDAQ, AMEX, or the average of the three.
"Downside momentum usually peaks at the end of a decline, as prices cascade into a primary low. On the upside, though, momentum peaks at the beginning of an advance, then gradually dissipates as the advance goes on, and the more powerful the momentum at the move's beginning, the stronger the overall move; REALLY strong momentum is found only at the beginning of a REALLY strong move: a new bull market or a new intermediate leg up within a bull market. We coined the term "breakaway momentum" in the 1970's to describe this REALLY powerful upside momentum. The following is a review of what it is and how it is typically generated.
Breakaway momentum (some people call it a "breadth thrust") occurs when ten-day total advances on the NYSE are greater than 1.97 times ten-day total NYSE declines. It is a relatively uncommon phenomenon...24 times it has occurred since World War II (an average of once every 3 1/2 years). Cyclical bull markets, though, are traditionally heralded by breakaway momentum, so we are hopeful that it will be generated this time around, too.
....The real trick in generating breakaway momentum? It's not a lot of advances; it's a lack of declines."
Versionshinweise
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Added arrows to indicate when the 10-day and 20-day hits the thresholds.
Versionshinweise
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Enhanced the indicator with several improvements.
Improved the visuals of the chart.
Added new options for selecting the source data.
Updated the calculations to be more efficient.
Added flags for breadth exhaustion. NOTE: This is based on my own observation and not called out by Deemer himself.
Hey this is an amazing indicator, thank you for sharing! I was wondering if you know how to set up TradingView alerts based on the "10-day bottoming trigger" triangle appearing. I can't seem to figure this out so any guidance you have on this is appreciated!
HuffYk
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great indicator! however could you please check why it generates signals which are not mentioned in Walter's web? I think problem is with 10day average value... seems your values are bit higher and it generates invalid signals e.g. Oct 2015 (followed by big drop in Jan 2016). Not sure if problem is with source data or your script as source code is not shared. Anyhow great work!
iMillss
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Hey man, love the indicator!!! Is there any possible way you could also make the long and short indicators mentioned in Wayne Whaleys paper, the ADT Thrust, and the MHL Signal. You cab read more about it here: docs.cmtassociation.org/pdfs/dowaward-2010.pdf. I think it would be amazing if you could script this for myself and others to use. Walter Deemer also give significant importance to this paper.