What Is The “True Market” Telling You?

You are receiving this email because you signed up to receive True Market Insider. Unsubscribe Keep the emails you value from falling into your spam folder. Whitelist True Market Insider. Forgot your login information? Click here. What Is The "True Market" Telling You? When it comes to investing, there's the market…and then there's the "True Market." Understanding the difference between the two—and knowing which one to follow—will have an immediate impact on your returns. Heck, it may even help you sleep better at night. So, what exactly is the difference? To explain, it's important to understand what most people think of as "the market." They're often familiar with popular indices such as the S&P 500 Index, the New York Stock Exchange, and the Dow Jones Industrial Average. Referred to as the external market, these are what most folks hear about when they turn on any financial news network. But these indices aren't reflective of what we like to call the "True Market," because they don't tell us what percentage of stocks actually participate in market advances or declines. Therefore, they don't reflect the true strength of the stock market. You see, those popular indices—the S&P 500, Nasdaq, and NYSE—are all capitalization-weighted averages of the stock market. That means the stock prices of larger companies are given more weight in the calculation of the index than the prices of smaller companies. So, if even a couple large-cap companies on the S&P move higher—think Microsoft or Apple—while most of the remaining stocks move lower, the S&P might move higher anyway. That's why most people make the mistake of thinking that the general stock market is moving higher when a major index goes up. In reality, it might only be one or two large-cap companies that are causing the entire index to rise. ========Recommended Link======== RETIRE IN LUXURY Join Chris Rowe as he reveals the secret strategies big institutions use to make obscene profits. Sign up now... The True Market Shows Supply in Control Be cautious of anyone telling you to focus on external indices as an overall stock market barometer. It's dangerous…and a good way for your portfolio to get taken to the cleaners. Instead, we here at True Market Insiders focus on market internals, or breadth (what we call the True Market). To get a read on what the True Market is doing, I like to look at the New York Stock Exchange Bullish Percent Index (NYSE BPI). In a nutshell, this indicator measures the percentage of stocks listed on the NYSE that are on "buy" signals. We look at this data on a point-and-figure chart, because it smooths out the noise that you'll see on most other charts. When the most recent column of the chart (on the far right) is filled with Xs, it's a bullish signal. But if that column is filled with a line of Os, it's a bearish signal. As you can see, as of yesterday, the NYSE BPI is in an O-column formation. In other words, the chart is telling us that it's time to be on the defensive because supply is firmly in control of the market. In order for a new column of Xs to form, we would need to experience a 6% reversal—meaning 6% or more of the stocks on this exchange have just moved to a "buy" signal. If you look back at the chart, you'll see that the most recent O-column hit the 52 box. So, in order for a new X-column to form, the 58 box would need to be filled (which would show us that 58% of stocks on the NYSE are on "buy" signals). Each box on the chart grid represents two percentage points, so even if the BPI goes up to 57.91, the 58 box won't be filled and a new X-column won't form. The NYSE BPI currently sits at 51.13 — so we're not even remotely close to a new reversal up. In other words, now's the time to be on the defensive. Air on the Side of Caution Had you looked at the Nasdaq or the NYSE just this past week, the external market would have painted a very different picture than the one I just showed you. The S&P 500 rose +1.8% as of Friday's close, while the Nasdaq rose +4.0% on the week. By only looking at these indices, you may think that the overall market is rallying and that it's time to get back into stocks. But, as I showed you earlier, these capitalization-weighted averages are often misleading. Even on days when "the market" looks like it's rallying and optimism's in the air, you'll want to look at the BPI and make sure the internal market is confirming what the external market is saying. Right now, the internal market is telling us to air on the side of caution. So now might be a good time to tighten up your bullish positions and take some risk off the table. If you want to learn how to keep an eye on the True Market yourself, I strongly recommend that you make a daily habit of looking over the NYSE BPI. We've made this available to every True Market Insider reader at truemarketinsiders.com/bpi. Better yet, we provide commentary on the NYSE BPI any time it makes a significant column reversal. By paying attention to just this one breadth indicator, you'll be light years ahead of 99% of other investors out there. If you want to learn even more about how you can use market breadth to time your trades, make sure you attend Chris' free event today at 1pm. During the event, Chris is going to show you how you can time your market trades the same way big institutions do, for maximum profit. Don't miss out on this chance to retire in luxury. Sign up now.   Trade safely, Chris Rowe True Market Insiders RETIRE IN WEALTH "Once you tap into these strategies, you can profit over and over like clockwork." Sign up now for this one-time FREE event RECENT STORIES Want to Make Consistent Money in the Market? The Most Accurate Indicator You've Never Heard Of The Best Traders All Have This "Superpower" Before You "Double Down" on a Losing Stock, Do This Instead… Copyright  ©   2020  True Market Insiders, All rights reserved. Our mailing address is: 33 SE 8th St, Boca Raton, FL 33432 Want to change how you receive these emails? 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