Market indicators are data analysis tools that interpret large market datasets to extract quantitative results (formulas and ratios) used for investment decisions. Market indicators are a subset of technical indicators that analyze data points from several securities rather than an individual stock (as used in technical analysis). There are many market indicators used for market analysis. Here are just a few examples of market indicators:
Market breadth: This indicator considers the number of stocks moving in a specific direction (downward or upward) to predict general market movement.
Market Sentiment: This indicator uses the price and trading volume of stocks to predict whether investors are bullish or bearish on the stock market.
On-Balance-Volume (OBV): This indicator uses the trading volume data points to predict market trends.
Moving Averages: This indicator uses the average prices of stocks over a specific time-span as a predictor. In this way, the prices are smoothed out, and every single fluctuation in price that does not carry meaningful information is not considered. This average can also give volatility information related to stock.
Advance-Decline Issues: This indicator calculates the ratio of advancing to declining stocks at a specific time. This indicator also gives weight to stocks using market capitalization which cancels out any bias in calculations.
New Highs-New Lows: This indicator uses the ratio of new highs to new lows at a specific time point. For example, observing many lows may suggest the market is bottoming. On the other hand, developing many highs may suggest market bubbles.