It seek to interpret stock or financial index data in an attempt to forecast market moves

1. MARKET INDICATORS

2. TECHNICAL INDICATORS
 A technical indicator denotes a set of data points obtained by applying a formula
to the share price data. Market based technical indicators give the overall direction
of the market.
 Technical analysts use three kinds of indicators viz.
 Mathematical Indicators
 Oscillators
 Market Indicators.

3. MARKET INDICATORS
 Market indicators are quantitative in nature and seek to interpret stock or financial
index data in an attempt to forecast market moves.
 Market indicators are a subset of technical indicators and are typically comprised of
formulas and ratios.
 Popular market indicators include
 Breadth Indicators
 Market Sentiment Indicator

4.  BREADTH INDIATORS
 The breadth indicator is classified into 3 categories:-
 Breadth of the Market
 Volume of Trade
 52 Weeks High and Lows

5.  BREADTH OF THE MARKET
 The breadth of the market measures the differences between the net advances and
net declines on a cumulative daily basis.
 In fact it is a measure that relates the number of shares advanced to the number of
shares declined.
 The measurement of market breadth involves the following steps:
1. Calculate the number of shares advanced and the number of shares declined on a
particular day.
2. Subtract the number of shares declined from the number of shares advanced.
3. Make continuous cumulative index by adding each day's difference and next day's
difference.

6.  Volume of trade
 The volume of trade refers to the total number of shares or contracts exchanged
between buyers and sellers of a security during trading hours on a given day.
 The volume of trade is a measure of the market's activity and liquidity during a set
period of time.
 They believe that rising prices accompanied with high trading volumes signal
bullish trend.
 On the contrary high volumes with falling prices indicate bearish trend.
 Technical analysts use trading volumes for the following purposes.
1.Trade volumes are used to confirm trends and trend reversals.
2.Trading volumes confirm chart patterns
3.Trading volumes pilot or lead price movements

7. 52 Weeks highs and lows
 The 52-week high/low is the highest and lowest price at which a security has
traded during the time period that equates to one year and is viewed as a technical
indicator.
 The 52-week high/low is based on the daily closing price for the security.
 Typically, the 52-week high represents a resistance level, while the 52-week low is a
support level that traders can use to trigger trading decisions.

8.  Market sentiment indicator
 Market participant's attitude towards market can change at any time because of
many reasons. The opinions, emotions, feelings and views of investors and traders
that affect the market are referred to as sentimental indicators.
 Sentimental indicators refer to those indicators that help to understand the
market's internal readings.
 It focuses on the investor psychology or how investors and traders are likely to
react in a given market. .
 The market sentiments are:-
1. Short interest ratio
2. Mutual fund liquidity
3. Odd-lot index
4. Put call ratio

9. 1. The short interest ratio
 Short selling is defined as the sale of a borrowed share currently inanticipation of
price declines in future. It is the selling of a share which the sellerdoes not own at
the time of trade.
 Investors sell short when they anticipate arice fall. The process of short selling runs
as follows.
Borrow shares → Sell immediately → Wait for the share to fall →
Purchase the share and return the share to the broker→ Make profits
 The short interest ratio tells how many days it would take to buy back all the shares
which have been sold short. It is calculated as;
Short Interest Ratio =Total Number of Shares Sold Short (monthly)
Average Daily Trading Volume

10. 2. Mutual fund liquidity
 Mutual fund liquidity simply means the buying power of mutual funds shows the
proportion of cash in the net assets of mutual funds on a daily or weekly or
monthly basis.
 It is a contrarian indicator as low mutual fund liquidity (fully invested position)
indicates that market is at its peak or near peak.

11. 3. odd-lot index
 It is another contrarian indicator which shows the sentiment of uninformed and
small investors. Odd - lot trade refers to the trade in less than 100 shares
 Generally, only small investors tend to engage in odd-lot transactions.
 This index used on the assumption that small investors or odd-lot traders miss on
key turning points.
 More specifically, when the market is at its peak, the odd lot traders will be buying
instead of selling. Similarly, they will be selling instead of buying when the market
is at its bottom.
Odd-lot Index = Odd-lot Purchases/Odd-lot Sales

12. 4. Put call ratio
 Put- call ratio is another contrarian indicator used by technical analysts to
understand the market trend.
Put-call ratio = Number of Puts Purchased (Right to sell shares)
Number of Calls Purchased (Right to buy shares)