What are the Moving Averages Components of a Market Configuration?

Answer: A Market Configuration consists of four Moving Averages Components, as follows:

1. 15 week Moving Average of “Advances minus Declines” of all stocks measured by the subject Market Index – utilized to monitor the subject Market’s momentum.

“Advances” is the number of stocks in the Market that increased in price during the measured week. “Declines” is the number of stocks in the Market that decreased in price during the measured week. Thus, “Advances minus Declines” is the number of Declines subtracted from the number of Advances, resulting in a single net number for each week. This weekly number can be either positive (in the event that more stocks rose in price) or negative (in the event that more stocks fell in price). In fact, the 15 week Moving Average can be either positive or negative – it doesn’t really matter. What is important is to know whether the Average moved UP or DOWN in relation to the previous week.

A commonly used abbreviation or shorthand for this Moving Average within this Web is “[Index] AD15wk”.

2. 5 week Moving Average of the subject Market Index – utilized to monitor short-term movement of the Index. The most important things to know about this Moving Average are: 

• rank (i.e., whether the 5 week has the Highest, Center, or Lowest value when compared to the 15 week and 40 week Averages for the same week), and sometimes

• direction (i.e., whether this Average moved UP or DOWN in relation to where it was the previous week). 

The commonly used abbreviation or shorthand for the 5 week Moving Average within this Web is “[Index] 5wk”. 

3. 15 week Moving Average of the subject Market Index – utilized to monitor intermediate-term movement of the Index. Like the 5 week, the most important thing to know about this Moving Average is:

• rank (i.e., whether the 15 week has the Highest, Center, or Lowest value when compared to the 5 week and 40 week Averages for the same week).

Direction for this Moving Average has no relevance..

The commonly used abbreviation or shorthand for the 15 week Moving Average within this Web is “[Index] 15wk”. 

4. 40 week Moving Average of the subject Market Index – utilized to monitor long-term movement of the Index. Again, the most important things to know about this Moving Average are:

• rank (i.e., whether the 40 week has the Highest, Center, or Lowest value when compared to the 5 week and 15 week Averages for the same week), and

• direction (i.e., whether this Average moved UP or DOWN in relation to where it was the previous week).

The commonly used abbreviation or shorthand for the 40 week Moving Average within this Web is “[Index] 40wk”.

So, as an example looking at the hypothetical “XYZ Market”, if the . . . 

• “XYZ AD15wk” was at 157 the previous week and is at 144 for this week (i.e., it moved DOWN), and the
  

• “XYZ 5wk” was at 21.8 the previous week and is at 23.3 for this week (i.e., it is the CENTER of the Index Moving Averages and it moved UP), and the
  

•  “XYZ 15wk” was at 24.6 the previous week and is at 23.1 for this week (i.e., it is the LOWEST of the Index Moving Averages and it moved DOWN), and the
  

• “XYZ 40wk” was at 26.2 the previous week and is at 25.0 for this week (i.e., it is the HIGHEST of the Index Moving Averages and it moved DOWN), 

 . . . then the XYZ Market Configuration Chart for this week would look like this: