Breadth of the market
Chart: Sensex (Left Axis), Advance Decline Ratio (ADR) (Right Axis)
New High Low Index
New High Low Index takes into account the number of stocks touching new yearly highs and lows on a trading day. The rising index along with the uptrend in Sensex suggests a powerful rally. The index is moving higher as Sensex scales new high signaling more stocks are hitting new 52-week highs with a broader participation of stocks in the market.
New High Low Index = Number of stocks touching new highs / (Number of stocks touching new highs + new lows)
Chart: Sensex (Left Axis), New High Low Index (Right Axis)
Sentiment suggests the mood of the traders and investors in the market. There are two groups of people in the market- Informed and uninformed investors (retail investors). Informed investors invest when market is trading at lower levels, sentiment is pessimistic and uniformed investors are bearish on the market and opt to invest in fixed deposits. When retail investors invest heavily in the market putting all the money in stocks and expect the market to touch new highs every day is a signal that market is likely to peak out. Unfortunately, no public data is available to measure Sentiment index but the general mood is retail investors are currently still cautious and not invested heavily in the market so far. Another good sign!