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Ratio of stocks trading above their moving average plus one standard deviation to...
This is a composite and market breadth indicator that calculates the ratio of stocks trading above the moving average of their close prices plus the 30-bar standard deviation to stocks trading below the moving average of their close prices minus the 30-bar standard deviation.
The Standard deviation is a measure of volatility, the higher the standard deviation is, the more volatile a stock is. The 30-bar standard deviation is used in the calculation of this composite.
The analysis of this market breadth indicator is as follows: a high value indicates that more stocks are trading above their standard deviation than stocks trading below their standard deviation and this is usually but not always considered as a bullish signal. A very high value is generally considered as a bearish pattern.
On the opposite, a low value may be interpreted as a sign that the market is in a bearish configuration. As with the very high values, an extreme low value indicates that the market is in a bullish configuration.
A value of one tells us that the number of stocks trading above their SMA + SD (Simple Moving Average + Standard Deviation) is exactly the same as the number of stocks trading below their SMA - SD.
Currently, the composite is set to include all stocks that are available in your list of symbols and that are trading above 2$.
You can of course change the settings of this ratio to include stocks that belong to a specific index or that are in a specific sector. You can also update the filter rule (close > 2) as well as the number of trading days used in both the simple moving average and the standard deviation. It is also possible to use an exponential moving average instead of the simple one.
