Weekly Market Breadth Analysis
By Technician Bob Nicholas
Bob Nicholas has been involved in technical analysis of the markets since 1990. Through extensive historical research influenced mostly by Norman Fosback's book "Stock Market Logic" (another market classic!), he developed a proprietary model in 1990 that incorporated many different market breadth indicators that assisted in forecasting the intermediate trend of the market. The indicators were also used to determine the overall risk in the current intermediate trend of the market. In 1995, he began following the McClellan Oscillator (McOsi) which is a breadth based indicator to determine the shorter-term trend of the stock market; the McOsi was first designed by Sherman and Marian McClellan in 1969.
In 1996, Bob also began following the ITBM (Intermediate Term Breadth Momentum Oscillator) which is a breadth based indicator to determine more intermediate term market momentum; the ITBM was developed by Carl Swenlin of Decision Point. It is a breadth momentum indicator that is based on both the McClellan Oscillator and its components. The ITBM was developed to give a better perspective on the underlying intermediate trend of the market and also to reduce the short term whipsawing of the McClellan Oscillator. The ITBM is positive when the indicator is rising above the zero line and is negative when it is declining
below the zero line. However, the better way to follow the ITBM is whether the indicator is rising or declining regardless of being above or below the zero line. A buy signal is issued if the ITBM is rising and a sell signal is issued if the ITBM is declining. Both the McOsi and ITBM are best used in determining overall short term and intermediate term market risk because they guage whether the
current momentum trend in the market has either a bullish or a bearish bias. Bob also supplements his market breadth analysis with detailed seasonal studies on things such as the 'presidential cycle', as well as various market correlation models. With a daily or weekly subscription to Market Charts/Market Turns you get Bob's weekly breadth analysis, sent each Sunday evening.
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