Continuing my series of integrating other tools with pivots, this post is about market breadth. There are many ways to measure: advance decline, cumulative advance decline, technicals on these like the McClellan oscillator, new highs & new lows, percentage above or below moving averages... the list goes on!
The Pivotal Perspective is that we can just look at pivots on the most broad indexes. I've already written about the NYSE Comp ($NYA) here, but we can go a bit further. If the focus is strictly the USA market, I'd add the Russell via IWM for ease. Then we can go to institutional indexes (or ETFs that use those as benchmarks):
MSCI EAFE via $EFA, developed markets outside USA & Canada
MSCI World Index via $URTH, developed markets
MSCI All Country Index via $ACWI, developed and emerging markets
MSCI Emerging Markets via $EEM
OK, you could make a case for the Russell 3000, or sticking with MSCI, and if anyone has any compelling arguments for why I should do things differently then please let me know. We've got 6: USA total including some obscure listings like ADRs ($NYA), a small caps index that is frequently traded and watched ($IWM); then global developed markets outside USA (EFA), developed including USA (URTH), developed & emerging combined ($ACWI) and emerging alone ($EEM). That should give us a good picture!
And if we wanted to keep things very simple you could just do NYA for USA and ACWI for the world at large and that is what I'll show in charts below. First chart weekly with long term pivots only, then daily below that. NYA was above both HPs (half year pivots) and YPs (yearly pivots) from July 2012 all the way to October 2014. The RSI is an interesting study but I'll leave comments on that for another day. After that drop, NYA was able to hold support with struggle in early 2015, and broke down convincingly in summer 2015. Key tell: the YP was clear resistance in early November 2015. The 2016 drop is really not a surprise with this view since the 2015 yearly pivot was resistance and 2016 opened below both long term pivots as well.
Now onto the daily with medium term (quarterly and monthly) pivots added. You can see the recent hold of the YS1, but NYA like most other indexes stuck under the FebPs as of close on 2/4/2016. Very simple, recovery of the FebP "should" lead to more bounce, but a second break of the YS1 would be quite bearish.
On to ACWI. Guess what? It looks like the nearly same chart! Slight difference is that 2015 cleared YR1 for a few weeks, probably due to China rally, but had similar breakdown of 2HP and YP in later 2015.
Like NYA, ACWI opened 2016 below all pivots and went straight down to YS1, which held on the low. But despite the bounce, it too is under the FebP as of 2/4/2016. We'll see what happens.