Chapter X: The mood of the market toward Home Depot show up in the Daily Closing Altitude and other Sentiment Indicators. |
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| A well known sentiment indicator is the NVI or Negative Volume Index for Home Depot. This modern version makes use of several enhancements added by Norman Fosback. The indicator is the proportion of the daily NVI as compared to the average daily NVI over the past year. The plot is orange below the unity line (neutral implication) and green above (bullish). |
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What to look for in an NVI plot for Home Depot: The NVI is an elegant indicator based on sound principles but it should not be interpreted in a simplistic manner. The orange plot (NVI less than unity) is not considered bearish because a lowering of the NVI is a natural tendancy under many market conditions. When the plot is in the green area, it indicates that prices are rising on low volume sessions, which is contrary to the normal condition. This can be a tip off to "accumulation behaviour" on the part of someone or some group in the market. The indicator seems most significant when prices are falling and the NVI is rising, which indicates a market that is "buying on the dips". |
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| The NVI resembles a fundamental indicator more than a technical indicator in at least one respect, as it seems to be indicative over a span of months or quarters, rather then the extremely short predictive span typical of many technical signals. This chart for Home Depot covers the few years before the start of the chart at the top of the page. |
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| For the trading week ending 6/26/2009, the weekly average closing altitude was 43.80 percent. The historical Closing Altitude is traced by the blue line in the chart above. The midline represents the 50 percent closing altitude. If the closing prices happened to be exactly halfway between the high and low, they would be plotted on this midline. Values above the midline indicate that day traders have positive feelings toward HD while traces below the midline are a sign that speculators are afraid to hold on to the issue overnight. The short-term trend is positive, with a slope of 47.66. Home Depot stock prices are shown in red. |
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| The Volume Portion is low for the latest data at 0.54. Here the blue indicates the proportion between Up Volume and Down Volume. Again, the horizontal blue line represents the neutral point. Home Depot share prices are overlaid in red. This is an important indicator for market timing, as a change in direction of the volume line may happen before the price turns.The last tic shows an uptrend in the volume portion of 0.00. |
Influence of Investor Sentiment on HD stock prices. Also, roadmap and Summary of most effective indicators: |
| Wednesday, July 01, 2009: We have news on Public Service Enterprise Group Inc., ticker symbol PEG. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning The Travelers Companies, Inc. and Kellogg Company. From the News Archive: (7/1/2009 ) Favorable events happened at Allegheny Energy, Inc., Bank of America Corporation, and American International Group, Inc.. Meanwhile, bad news came from Lexmark International, Inc.. |