Technical analysis of NYSI/DJI
by Howard Waxenberg
There is a great amount of technical analysis that is done intraday by number crunching computers that
are connected to online databases. For the majority of investors and money managers that do not have
access to computers and streams of up-to-the-second data there still remain a great many technical tools
that require only some time after the markets have closed, a calculator, and some graph paper.
These technical tools, when properly constructed and applied, can produce results equal to, if not better
than the workings of a personal computer with streams of data. One of the best examples of this basic
technical analysis is the work that can be done with the daily and weekly figures for the number of
advancing and declining issues, the advance decline (a-d) lines and their derivatives.
There are seven different indexes for which information is readily available for a-d analysis. These
indexes are the New York Composite, the American Stock Exchange, the NASDAQ Composite, the Dow
Jones Industrials, the Dow Jones Transports, the Dow Jones Utilities, and the Dow 20 Bond Index. For
each of these indexes and averages, two a-d lines can be constructed, one using the daily a-d figures and
one using the weekly figures.
I put more importance on the daily lines in my work. For that reason and for the sake of brevity, I will
confine my discussion to the daily a-d line of just one index, the New York Composite. This line is
constructed from information from the New York Stock Exchange. Work with this line will yield
information on the strength and direction of two indexes, the New York Composite (NYSI) and the Dow
Jones Industrials (DJI).