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S&P 500 earnings are in for 2024 Q3, and here is our valuation analysis.

The following chart shows the normal value range of the S&P 500 Index, indicating where the S&P 500 would have to be in order to have an overvalued P/E of 20 (red line), a fairly valued P/E of 15 (blue line), or an undervalued P/E of 10 (green line). Annotations on the right side of the chart show where the range is projected to be based upon earnings estimates through 2025 Q3.

Historically, price has usually remained below the top of the normal value range (red line); however, since about 1998, it has not been uncommon for price to exceed normal overvalue levels, sometimes by a lot. The market has been mostly overvalued since 1992, and it has not been undervalued since 1984. We could say that this is the “new normal,” except that it isn’t normal by GAAP (Generally Accepted Accounting Principles) standards.

We use GAAP earnings as the basis for our analysis. The table below shows earnings projections through September 2025. Keep in mind that the P/E estimates are calculated based upon the S&P 500 close as of December 31, 2024. They will change daily depending on where the market goes from here. It is notable that the P/E remains outside the normal range.

The following table shows where the bands are projected be, based upon earnings estimates through 2025 Q3.

This DecisionPoint chart keeps track of S&P 500 fundamentals, P/E and yield, and it is updated daily — not that you need to watch it that closely, but it is up-to-date when you need it.

CONCLUSION: The market is still very overvalued and the P/E is still well above the normal range. Earnings have ticked up and are projected to trend higher for the next four quarters. Being overvalued doesn’t require an immediate decline to bring valuation back within the normal range, but high valuation applies negative pressure to the market environment.

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(c) Copyright 2025 DecisionPoint.com

Technical Analysis is a windsock, not a crystal ball.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

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The market sometimes struggles to find direction, as it digests mixed yet impactful economic data. Wednesday was one of those days. With US 10-Year Treasury yields rising and FOMC minutes highlighting inflation concerns, major indexes swung lower, then higher, before closing mixed: the Dow ($INDU) and S&P 500 ($SPX) edged up, while the Nasdaq Composite ($COMPQ) ended in the red.

Amid the back-and-forth, there are several tools you can use to find stocks that may be of interest, depending on your angle of approach. I was interested in finding stocks that bucked market indecision, specifically those that notched all-time or 52-week highs.

Using the StockCharts New Highs tool, one of the Dashboard panels, I observed that Boston Scientific Corp (BSX) occupied the top spot.

FIGURE 1. NEW HIGHS TOOL. BSX defied the market’s turbulence, reaching a record high.Image source: StockCharts.com. For educational purposes.

Though not one of the flashier stocks on Wall Street, you’ve likely heard of BSX, or you may be familiar with some of the products it manufactures. Still, it doesn’t hurt to get a snapshot of its technical and fundamental profile. Here you can use the StockCharts Symbol Summary tool for a quick analysis.

FIGURE 2. TOP SECTION OF THE SYMBOL SUMMARY PAGE FOR BSX. It may not be the “sexiest” stock, but it’s a “solid” one.Image source: StockCharts.com. For educational purposes.

The stock has a sizable market cap and liquidity, making it tradable for those interested in the stock. If you scroll down, the summary, you’ll find that despite a few quarters of earnings misses, it has a solid history of topping revenue expectations. (The summary offers much more detailed technical and fundamental data, so I encourage you to explore it thoroughly.)

A closer look at BSX reveals its innovative product portfolio, strategic acquisitions, robust financials, strong market position, and favorable analyst expectations—all pointing to a “solid” company with promising growth potential.

Let’s look at a weekly chart for a big-picture view of its historical price action.

FIGURE 3. WEEKLY CHART OF BSX. The stock has outperformed the healthcare sector (XLV) and the S&P 500 since 2022.Chart source: StockCharts.com. For educational purposes.

BSX’s solid uptrend began toward the end of 2022. It began outpacing the S&P 500 earlier that year and the Health Care sector (using the Health Care Select Sector SPDR ETF XLV) later that summer. Its relative price performance shows that it’s outperforming the sector by over 107% and the broader market by roughly 80%.

Notice that price surge in the last bar? That was due to a major acquisition (it purchased Bolt Medical) and a competitor’s, Johnson & Johnson (JNJ), product suspension benefiting BSX. As far as fundamental projections are concerned, they vary, as with most stocks. Nevertheless, for those interested in adding BSX stock to your portfolio, it’s best to decide on a favorable entry point. For that, you need to look at the daily chart.

FIGURE 4. DAILY CHART OF BSX. Note the runaway gap that will likely get filled, signaling a potential buying opportunity.Chart source: StockCharts.com. For educational purposes.

The stock has been experiencing an extended period. Note that the 50-, 100-, and 200-day Exponential Moving Averages are all in “full-sail,” indicating the strength of BSX’s years-long uptrend.

BSX’s news-driven runaway gap is likely to be filled as bullish sentiment moderates. Plus, the Money Flow Index (MFI), which considers volume and momentum, has been declining from “overbought” levels (top panel), showing a slight bearish divergence that adds to the case for a near-term pullback.

As price pulls back, the 50-, 100-, and 200-day EMAs should provide clear support levels; each EMA presenting a potential entry point for those looking to go long.

The chart also plots a Bullish Percent Index (BPI) for the healthcare sector ($BPHEAL) in the bottom panel. Why plot this when BSX is the clear outlier and outperformer? You will want to monitor breadth to assess the overall sector context regardless of BSX’s performance. For instance, if the sector is undergoing a bullish rotation, such a tide tends to lift most stocks within that sector, including BSX.

In the case above, the healthcare BPI shows that the sector has risen above “oversold” levels (the 30% line) as 42% of stocks in the sector are exhibiting P&F buy signals. BPI favors the bulls when the line exceeds 50%. So, while BSX is outperforming the sector, the proverbial tides appear to be turning in BSX’s favor.

Action Steps

If you’re looking to add BSX to your portfolio, consider the following action steps:

Add BSX to your ChartLists to monitor the stock, using the indicators suggested above.Monitor BSX’s price action in light of any developments that may affect it, as the gap and surge in price were heavily news-driven.Look to the EMAs as potential support levels and entry points.Keep an eye on market breadth to assess how sector performance may (or may not) affect the stock’s performance in the near-to-intermediate term.

At the Close

StockCharts’ New Highs Tool is an invaluable resource for spotting standout stocks. In the case above, the tool highlighted BSX as a stock that defied broader market uncertainty, providing a strong starting point for deeper analysis.

While healthcare may not currently rank among the most bullish sectors, BSX has been bucking this trend, rising steadily for the last two and a half years. Its outperformance — driven by acquisitions and competitor setbacks — suggests it could continue to grow, making it a compelling candidate for investment. Additionally, if the healthcare sector eventually turns bullish, it may provide an opportunity to jump into the sector during the early stages of a bullish rotation.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The 10-Year Treasury Yield has gone up a full percentage point, from a low of 3.6% in September 2024 to a level of 4.6% this week.  What does this rapid rise in interest rates mean for your portfolio? 

Let’s look at the shape of the yield curve by comparing multiple maturities, review how recent moves on the yield curve relate to previous recessionary periods, and analyze the most important charts to gauge a potential impact.

Higher Rates Mean Bad News for Borrowers

The chart of the 10-Year Treasury Yield ($TNX) has effectively been in a wide trading range since mid-2023.  The 10-Year has fluctuated between lows around 3.6-3.8% and highs in the 4.7-5.0% range.  As we’re now seeing a 4.7% yield on the 10-Year, we could be setting up for a retest of the 2023 high around 5.0%.

Higher rates can definitely put pressure on industry groups like homebuilders, because this move in the 10-Year means new home buyers can expect much higher mortgage payments.  But in terms of broad market implications, the shape of the yield curve could have even more significance in the coming months.

The bottom two panels show the spread between the 10-year point on the yield curve compared to two other maturities: the 3-month and 2-year points.  In recent years, we have experienced an inverted yield curve, where the short-term yields are higher than long-term yields.  But with the Fed lowering short-term rates, and long-term rates turning back higher, we once again have a normal shaped yield curve.

The Yield Curve Is No Longer Inverted- So What?

Investors love to debate whether a recession is likely, because that confirms that the economy is no longer growing as it usually does.  But given the lag in economic data, investors can actually look at the shape of the yield curve to determine if conditions are present that suggest a recessionary period is coming.

Here we’re taking the 2-year vs. 10-year points on the yield curve, and plotting that spread back to 1985.  I’ve placed a red vertical line where the yield curve turned back to a normal shape after being inverted, and I’ve also included orange shaded areas which represent recessionary periods.

You may notice that over the last 40 years, every time we’ve had an inverted yield curve, and then the spread has turned back positive, we’ve seen a recession soon afterwards.  You may also notice that the performance of the S&P 500 (bottom panel) confirms that the yield curve moving back to a normal shape usually happens just before a bear market begins.

While the long-term implications of a normal shaped yield curve are bullish, as they imply optimism about future economic growth, the reality is that the short-term environment for stocks is usually fairly unstable.

Market Trend Is What Matters Most

So what do we do given this bearish headwind for stocks going into 2025?  I would argue that now, more than ever, it pays to follow the trend.  As long as the medium-term and long-term trends in the S&P 500 remain constructive, then I’ll want to follow that uptrend until proven otherwise.

My Market Trend Model is designed to track the trend in the S&P 500 on three time frames: short-term (a couple days to a couple weeks), medium-term (a couple months), and long-term (over a year).  As of mid-December, the short-term model turned bearish for the S&P 500.  The medium-term and long-term models remain bullish through last Friday.

I consider the medium-term trend to be the most important as it serves as my main “risk on/risk off” measure.  When the model is bullish, that tells me to look for long ideas and take on additional risk.  When the model is bearish, that tells me to focus more on capital preservation than capital growth.

The short-term model turned negative five times in 2024, but the medium-term model remained bullish in all five cases.  This helped me understand that those were brief pullbacks within a longer uptrend phase.  If and when the medium-term model turns negative, you’ll hear me take on a much more cautious tone on my market recap show, as I’ll be looking for opportunities to take risk off the table.

RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

In this exclusive StockCharts video, Julius takes a look at what he recently called “The Best Five Sectors” on a relative rotation graph side-by-side with their price charts. He then takes an in-depth at Consumer Discretionary, and shares some interesting stocks within, including AMZN, ULTA, and more.

This video was originally published on January 8, 2025. Click on the icon above to view on our dedicated page for Julius.

Past videos from Julius can be found here.

#StayAlert, -Julius

In this exclusive StockCharts video, Joe shares how to identify the best entry point by using two timeframes, Moving Averages, MACD and ADX. He shows two different examples of when to pull the trigger. Joe highlights weakness in the Large Cap universe, and finally goes through the symbol requests that came through this week, including NVDA, ABNB, and more.

This video was originally published on January 8, 2025. Click this link to watch on Joe’s dedicated page.

Archived videos from Joe are available at this link. Send symbol requests to stocktalk@stockcharts.com; you can also submit a request in the comments section below the video on YouTube. Symbol Requests can be sent in throughout the week prior to the next show.

What a difference a day makes! December ISM Services data suggests the service sector remains strong. The JOLTS report showed there were 8.09 million job openings in November — that’s well above the 7.7 million that was expected. US economic growth is strong, as is the labor market. Stocks sold off on the news and for the rest of the trading day. Tuesday’s economic data brought back thoughts of the possibility of the Fed dialing back on its rate cuts in 2025.

The Federal Open Market Committee (FOMC) releases its minutes on Wednesday at 2:00 PM. Investors will be listening for any hawkish signals from the Fed. Expect some market action on Wednesday afternoon. The stock market is closed on Thursday in honor of former President Jimmy Carter. On Friday, we have the December Non-Farm Payrolls, so don’t be surprised if volatility climbs higher this week.

The Return of the Inflation Narrative

While stocks sold off on inflation and labor concerns, the bond market saw a lot of excitement. Treasury yields rose on the news with the 10-year yields closing at 4.68%. It’s within spitting distance of its 52-week high of 4.737. If it gets there, things could get worse for stocks.

They were bad enough on Tuesday. All broader indexes closed lower with the Nasdaq Composite ($COMPQ) closing 1.89% lower. The daily chart of the Nasdaq (see below) doesn’t paint a pretty picture.

FIGURE 1. DAILY CHART OF NASDAQ COMPOSITE. The series of lower highs should be an alert that the index is pulling back.Chart source: StockCharts.com. For educational purposes.

The Nasdaq Composite is getting close to its 50-day simple moving average (SMA), and a break below it would be cause for concern. It would be even more concerning if the break coincides with a declining Nasdaq Advance-Decline Issues (lower panel).

The Nasdaq has crossed below its 50-day SMA in the past and recovered. The recoveries presented opportunities to accumulate long positions in Nasdaq stocks. A similar scenario could play out this time, but Mark Twain’s quote, “History doesn’t repeat itself, but it often rhymes” keeps popping up. What will the rhyme be this time?

Energy and Health Care

Overall, it was a pretty grim day for stocks. Nine of the 11 S&P sectors closed lower; Energy and Health Care were the only two that closed higher. However, the charts of the exchange-traded funds (ETFs) that represent these sectors — Energy Select Sector SPDR (XLE) and Health Care Select Sector SPDR (XLV) — don’t display a bullish trend. The Bullish Percent Index (BPI) for these sectors is below 50, with the S&P Healthcare Sector BPI being the more favorable of the two at 39.39 (see chart below).

FIGURE 2. ENERGY AND HEALTH CARE SECTORS. Even though Energy and Health Care were the best performing sectors on Tuesday, their charts aren’t exhibiting bullish characteristics.Chart source: StockChartsACP. For educational purposes.

The best-performing S&P 500 stock on Tuesday was Moderna, Inc. (MRNA) with an 11.65% rise. Moderna is developing a vaccine for bird flu, which helped propel the stock price. The Market Movers panel on Your Dashboard shows a handful of health care and energy stocks in the S&P 500, %Up category.

Even though the Energy or Health Care sector charts are far from bullish, it’s worth keeping an eye on them. If a bullish trend takes shape while other sectors, such as Technology and Consumer Discretionary, turn bearish, it may be worth allocating a portion of your portfolio to the bullish-performing sectors.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

On Tuesday, January 7, 2025, CES (Consumer Electronics Show) 2025 opens its doors in Las Vegas for a four-day event. As the world’s largest technology expo, CES is the hub for global tech innovation,  spotlighting the cutting-edge advancements that will define tech trends in the year ahead.

Two key drivers are at the heart of today’s tech focus: semiconductor chips and AI technology. Both present a strong case for investment, and investing in semiconductor companies that enable growth in AI ecosystems is among your strongest bets for profiting from future trends.

That said, you should look at the semiconductor industry to see which companies offer the strongest opportunities. Let’s begin with VanEck Vectors Semiconductor ETF (SMH) as our industry proxy. Below is a weekly chart.

FIGURE 1. WEEKLY CHART OF SMH. Notice how the Accumulation/Distribution Line (ADL) sits above the current price action. Chart source: StockCharts.com. For educational purposes.

Following a two-year uptrend, SMH appears to be caught within a narrow trading range (see magenta box). The two blue dotted lines mark SMH’s highest high ($281.82) and its corresponding swing low ($199.61). The current price gap indicates a bullish attempt to break out of the current range.

The Accumulation/Distribution Line (ADL), a volume-based indicator that tracks the cumulative flow of money into and out of a security, shows a noticeable rise despite the price remaining stuck in this range. This creates a slight bullish divergence, suggesting that SMH is experiencing capital inflows that could eventually push the ETF above its current trading range.

Now that you have a broader perspective on what semiconductor stocks are doing, let’s zoom in on three that are highly involved in AI tech production:

NVIDIA Corp. (NVDA): The leader in AI chips.Advanced Micro Devices, Inc. (AMD): A secondary competitor in AI-focused GPUs and CPUs.Taiwan Semiconductor, Mfg. (TSM): A major foundry for AI semiconductors.

NVDA Testing All-Time Highs

NVDA’s daily chart shows that the stock is experiencing a volatile uptrend and is now experiencing a strong bout of selling after approaching its all-time high of $152.88. The question is whether NVDA is topping out or has enough technical momentum to eventually break through this level and continue setting new record highs.

FIGURE 2. DAILY CHART OF NVDA. Is it toppy or might it have enough momentum to break above its all-time high?Chart source: StockCharts.com. For educational purposes.

NVDA’s StockChartsTechnicalRank (SCTR) score, despite occupying the ultra-bullish 90 range for some time, now stands at around 71. Momentum-wise, the MACD (Moving Average Convergence/Divergence) has begun showing green shoots of bullishness, with the MACD line crossing over the signal line and both appearing to ascend above the center line. This indicates that the stock’s short-term momentum is increasing, which suggests the possibility of continued upward movement.

Add NVDA to your ChartList and look to the trendline as a potential support level should the stock dip. It may present a strong buying opportunity.

AMD: Second Runner Up and Far Behind

Take a look at AMD’s weekly chart.

FIGURE 3. WEEKLY CHART OF AMD. As NVDA’s major competitor, AMD’s performance has been frighteningly poor.Chart source: StockCharts.com. For educational purposes.

AMD is supposed to be NVDA’s most direct competitor in AI chip production. If this is the case, can you expect a dramatic turnaround and substantial growth from where AMD is now?

AMD is far underperforming NVDA, down almost -79%. Watch the most recent bounce (see blue arrow) off the support range marked by the blue rectangle. The chart includes an overlay of a ZigZag line. This outlines the trend movement, showing the critical swing points defining an uptrend and downtrend.

Does the current bounce indicate a refusal to break below the most recent swing low? If so, will AMD have enough momentum to break above the last swing high? This is what’s key to monitor: specifically, whether AMD breaks below the swing low or above the swing high. As for now, the trend is still downward.

Add AMD to your ChartLists and, if you’re bullish, wait for a clear sign of reversal using volume-based and momentum indicators, keeping a tight stop on the most recent swing low. Also, you may want to check the SCTR score to see if it is moving dramatically upward.

TSM: The AI Chip Foundry

Last but not least, there’s TSM, the foundry. Take a look at its weekly chart and compare it to that of AMD.

FIGURE 4. WEEKLY CHART OF TSM. There’s a strong uptrend and the stock has reached a record high.Chart source: StockCharts.com. For educational purposes.

This week, TSM is exhibiting an almost ideal uptrend and gapping upwards to “all-time high” territory. But is it bound for another cyclical pullback or does it have enough momentum to drive higher?

Shift over to a daily chart and you might see something problematic.

FIGURE 5. DAILY CHART OF TSM. There’s a clean uptrend, but money flow is lagging.Chart source: StockCharts.com. For educational purposes.

TSM’s uptrend looks pristine (see blue dotted line). But if you look at the ADL, you’ll notice how the cumulative money flows peaked in early 2024. Now it’s showing a bearish divergence, in which TSM has broken into record highs amid a backdrop of dwindling money inflows.

There’s a strong chance of a pullback, and the current bout of selling may be tipping the market’s hand toward this bias. If TSM finds support at the trendline, look for other signs that momentum may be picking up. If it breaks below the trendline, then look for more downside. Hint: There are rumors that NVDA is evaluating Samsung foundry due to TSM’s high costs and limited production capacity. If that transition goes through, it may impact TSM’s bottom line.

Actions to Take Now

So what can you do from here on?

Add SMH, NVDA, AMD, and TSM to your ChartLists.Watch SMH to see if it successfully challenges resistance at $281.82.See if NVDA bounces off the trendline and eventually breaks above $152.88, either of which can serve as a buying opportunity.Monitor AMD for signs of a reversal on strong momentum before considering a long position.Keep an eye on TSM’s trendline for signs of support or further downside in light of weakening money inflows.

And if you’re interested in all the new tech products, follow CES 2025 reports for insights into new tech trends that could impact the semiconductor sector.

At the Close

Semiconductors and AI remain at the forefront of innovation. CES 2025 is likely to reflect this trend among several of its showcased products. As companies race to meet rising demand in this competitive field, staying alert to rapid developments could offer early insights into future-defining investment opportunities.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

In this video, Dave shares a long-term analysis of the Ten-Year Treasury Yield, breaks down how the shape of the yield curve has been a great leading indicator of recessionary periods and weaker stock prices, and outlines the chart he’s watching to determine if early 2025 will look a great deal like early 2022.

This video originally premiered on January 6, 2025. Watch on StockCharts’ dedicated David Keller page!

Previously recorded videos from Dave are available at this link.

In today’s free DP Trading Room Carl and Erin discuss whether this market rally can get legs and push the market even higher? Mega-caps are looking very positive with the Magnificent Seven leading the charge. Technology is showing new strength along with Communication Services.

Carl starts the trading room off with his review of the DP Signal Tables. He details the market trend and condition. He discusses through his presentation the possibility of a follow-on rally. He also covers Bitcoin, Yields, Bonds, Gold, the Dollar, Crude Oil among others.

Next up was a review of the Magnificent Seven in the short and intermediate terms. Are they positioned bullishly to continue to push the market higher?

Erin jumps in with a complete review of sector rotation. Takes a deep dive into the Semiconductor industry group (SMH) and gives us an “under the hood” look at Biotechnology (IBB) as well.

The pair finish with a look at viewer symbol requests that today included quite a few Semiconductor stocks and a smattering of other Tech and Energy stocks.

01:58 DP Signal Tables

04:44 Market Overview and Analysis

13:48 Magnificent Seven

19:37 Extra Bond Discussion

23:52 Questions

27:12 Sector Rotation

34:22 Semiconductors and Biotechs

38:38 Symbol Requests

Don’t miss out on attending the DP Trading Room LIVE! Register once here: https://zoom.us/webinar/register/WN_D6iAp-C1S6SebVpQIYcC6g#/registration

Definitely don’t miss out on our free two week trial of any of our DecisionPoint subscriptions! Try out the new Scan Alert System or amp up your trading with DP Alert and DecisionPoint Diamonds! Just use coupon code: DPTRIAL2 when you subscribe here: https://www.decisionpoint.com/products.html

The DP Alert: Your First Stop to a Great Trade!

Before you trade any stock or ETF, you need to know the trend and condition of the market. The DP Alert gives you all you need to know with an executive summary of the market’s current trend and condition. It not only covers the market! We look at Bitcoin, Yields, Bonds, Gold, the Dollar, Gold Miners and Crude Oil! Only $50/month! Or, use our free trial to try it out for two weeks using coupon code: DPTRIAL2. Click HERE to subscribe NOW!

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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2025 DecisionPoint.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

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