The Indicator Based Market Exposure (IBME) system was created by Big Wave Chartist as a way to navigate the markets using a confluence of three different signals to determine when the "internals" of the market are in your favor and how heavily invested to be at any point. The idea of the system is also to flash warning signs when the market internals are beginning to deteriorate so as to take a defensive stance. Of course this system can be strictly adhered to, or it can be incorporated into a more discretionary style of trading, and be combined with progressive exposure into (and out of) the market as positions gain (or lose) traction.
The IBME displays a straightforward action signal based on the combination of the 3 separate signals:
Green 🟢 Full size-longs permitted
Yellow 🟡 Pilot positions permitted
Red 🔴 No longs allowed
So let's get into the signals used:
McClellan Summation Index
Net New Highs/Lows
Net New Highs Crossover
McClellan Summation Index (MSI) The McClellan Summation Index is a long-term version of the McClellan Oscillator, which is a market breadth indicator based on stock advances and declines. Interpretation is similar to that of the McClellan Oscillator, except that it is more suited to intermediate to major trends and related reversals. The McClellan Summation Index can be calculated as the sum of all the daily values of the McClellan Oscillator. This is used along with the 10-sma to watch for a crossover indicating an uptrend or downtrend beginning.
Net New Highs/Lows This is the net number of stocks making 52-week highs or lows. For instance, if there are 60 new 52-week highs and 20 new 52-week lows, the net number will be 40 net new 52 week highs. This signal is particularly useful in gauging breadth.
Net New Highs Crossover This is the description of NNHC from the original separate version of this indicator created by HikoStory: "Net New Highs can guide you to increase or decrease your exposure based on the current market health. They are calculated by subtracting the new highs from the new lows, based on all stocks of the...NASDAQ. A positive value shows that the market is doing good, since more stocks are making new highs compared to new lows. A negative value shows that the market is doing bad, since more stocks are making new lows compared to new highs. Combined with a moving average you can see crossovers that can warn you early when there is a change in the current market health."
The default index for the IBME is the Nasdaq.
The IBME is meant to be used on a daily time frame chart, therefore the signal will only show on a daily time frame chart.
Display options include:
Show/hide individual signals
Table background/font color
Table size/placement
Nota Keluaran
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Version 2 now includes the option to highlight the chart background to see historical as well as current IBME signal. Also added the recommended action into the table.
Nota Keluaran
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Version 3 brings a few major upgrades.
Takes into account price action of the QQQ (default) to filter out potential false signals
Alerts
More signal combinations and current signal displayed
The IBME system has now been updated to take price action as well as the readings from the other 3 indicators when giving a signal. All of the signals can be found in this updated table, the current reading number will also be displayed next to the IBME action in the data table.
A 10/20ma Uptrend is referred to as price > 10sma > 20sma.
Added alerts to notify when the IBME signal has changed colors.
Nota Keluaran
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Update to show if an uptrend is confirmed in the individual signals table.
An uptrend for this IBME system is defined as 10sma > 20sma and price >10sma.
This is a GREAT Situational Awareness indicator! I have been doing this manually, or watching BWC posts. Thank you! Question/improvement - what is the condition color for MSI: Below ... NNH/L: positive ... NNHC: negative (as was fir 8.10.23 using the NYSE)
Amphibiantrading
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@Personaljeebus0609, Thanks! That's a good question. Let me check with @BigWaveChartist. That logic is missing from the table. I will get that updated
Maarten_88
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Would it be possible to check the history of the IBME value? If you scroll through the history of a stock, that the IBME value is calculated for that specific date?
Amphibiantrading
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@Maarten_88, the latest update I just published will allow you to see the historical value of the IBME by selecting the highlight background version. You can also use the bar replay function to go back whichever date you want to see.
@Amphibiantrading - This is super awesome. Perhaps you might want to add up/down volume and stock participation (% of stocks above 50 day or 200 day moving average). Nevertheless, great work!
Amphibiantrading
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@sanjs255, Thanks! I coded this based on another traders system, but I will definitely mention this to him and see what he says!
Kooshoosh
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Thank you so much for this market breath indicator, very useful, love it! Is it possible to have a choice of "Tiny" (smaller than Small) in the table/font size selection? This will enable users to see more of the chart but still able to see the table.
Question/improvement - what is the condition color for
MSI: Below ... NNH/L: positive ... NNHC: negative (as was fir 8.10.23 using the NYSE)