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1997issue C011-3

Three-gate centered strength in market-breadth construction

This archive construction keeps a relative breadth residual, a new-high strength gate, and a new-low strength gate on separate centered-strength scales so a close-to-close reversal is allowed only when all three conditions hold.

  • Six aligned daily series feed the construction, but only the traded large-cap index is required to stay visible.
  • Exponential pre-smoothing is applied to new-high counts, new-low counts, and the advance-decline ratio before any centered-strength transform.
  • A three-gate reversal allows a close-to-close flip only when the relative breadth residual and both new-extreme gates are true together.
  • Companion plots reuse the same thresholds and lookbacks so each gate can be inspected on its own screen-scaled pane.
Entries in this reading3 entries
Exponential smoothing117 readingsCurrent trackMarket breadth120 readingsStochastic oscillator170 readings

Six aligned daily series

The construction uses six aligned daily series: a traded large-cap index, a second price index kept only as a relative-strength benchmark, exchange 52-week new highs, exchange 52-week new lows, advancing issues, and declining issues. Only the traded series is required to stay visible.

Centered strength after pre-smoothing

A reusable strength transform rescales any series to a minus-fifty to plus-fifty band by taking one hundred times the location of the current value between the lookback low and high, then subtracting fifty. That mapping is centered strength: a lookback range placed so zero is the midpoint of recent values.

Raw internals are not passed straight into that transform. New-high and new-low counts receive exponential pre-smoothing over three periods. The advance-decline ratio, defined as advancing issues minus declining issues divided by their sum, receives exponential pre-smoothing over ten periods. Only after those averages are the series converted to centered strength.

The same centered-strength value can be obtained as stochastic-style strength. Apply a fast stochastic to one series by repeating that series in every price slot, then subtract fifty from the zero-to-one-hundred result.

The residual and the new-extreme gates

Advance-decline relative strength is the ten-period centered strength of the smoothed advance-decline ratio minus the ten-period centered strength of the second price index. That difference is the relative breadth residual.

The new-high strength gate is the centered strength of the exponentially smoothed 52-week new highs, compared with explicit buy and sell bounds. The new-low strength gate is the same construction on exponentially smoothed 52-week new lows.

A buy-side close reversal requires all three of: relative advance-decline strength at or above the buy threshold, new-low strength at or below its buy bound, and new-high strength at or above its buy bound. A sell-side close reversal requires all three of: relative advance-decline strength at or below the sell threshold, new-low strength at or above its sell bound, and new-high strength at or below its sell bound. That joint test is the three-gate reversal.

The first complete input list sets the buy residual threshold at 5, the sell threshold at minus 35, the new-low strength lookback at 40 periods, the new-high strength lookback at 10 periods, new-low bounds of minus 10 and 30, and new-high bounds of minus 10 and 0.

Buy and sell levels on the three centered-strength gates

A close-to-close reversal is allowed only when the A-D residual, new-low strength, and new-high strength all clear their own gates on the shared −50 to +50 scale. Buy needs the residual above +4, new-low strength at or below −10, and new-high strength at or above −10; sell needs the residual at or below −40, new-low strength at or above +30, and new-high strength at or below 0. Those six levels are the SMARTrader coefficient rows in the source table and match the TechniFilter signals in the same tip.
A close-to-close reversal is allowed only when the A-D residual, new-low strength, and new-high strength all clear their own gates on the shared −50 to +50 scale. Buy needs the residual above +4, new-low strength at or below −10, and new-high strength at or above −10; sell needs the residual at or below −40, new-low strength at or above +30, and new-high strength at or below 0. Those six levels are the SMARTrader coefficient rows in the source table and match the TechniFilter signals in the same tip.S&P 500 with NYSE advances, declines, new highs, new lows, and DJIA · Daily

The TradeStation listing in the same tip uses Brs=5 and Srs=−35 rather than 4 and −40. New-low strength is centered over 40 days; new-high strength and the residual use 10 days. Each strength series is a fast stochastic of a pre-smoothed input, then shifted by −50.

Companion plots on matching scales

Companion plots of the residual, new-high strength, and new-low strength reuse the same thresholds and lookbacks as the reversal rules so each gate can be inspected on its own screen-scaled pane.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
54 of 71 in the Market breadth track
19971-9 pp.Next on Market breadthDaily advance-decline and new-high new-low breadth signalsThe daily construction keeps weekly breadth timing while aiming to reduce the wait between weekly signals and to avoid holiday-week distortions in new-high and new-low counts.
All readings on this track · 71 readings
  1. 1987How a failed rebound, weak breadth, and cycle dates broke the 1987 bull case
  2. 1988Diagnosing market bottoms with breadth, divergence and averages
  3. 1988Diagnosing index tops with breadth divergences
  4. 1988Record highs versus seven-day breadth and divergence
  5. 1989Constructing a percentage-scaled internals composite
  6. 1989Constructing a weekly block-tick breadth z-score
  7. 1989Constructing a dual-rate advance-decline oscillator
  8. 1989Normalize advance-decline series for a common-scale comparison
  9. 1990Unchanged-issue share as a narrow-breadth case study
  10. 1990Evaluating daily and weekly unsigned plurality breadth
  11. 1990Constructing paired new-high and new-low breadth indicators
  12. 1990Ten-day HI/LO extremes as a long-horizon breadth signal
  13. 1990Confirming index cycles with breadth, volume, and waves
  14. 1990Index cycle gates from breadth and volume
  15. 1990Constructing advance-decline breadth indicators
  16. 1990Weekly advance-decline oscillator: weight map, extremes, and spike cycle
  17. 1990Price-weighted construction distorts breadth, support, and trend
  18. 1991A peak-sequence test from the new-highs-to-advances-ratio
  19. 1991Fuzzy rules that turn daily market-breadth into a session consensus
  20. 1991From daily breadth tallies to a weighted consensus signal
  21. 1991Retesting market-breadth when market structure changes
  22. 1991Constructing TRIN as a breadth-volume ratio
  23. 1991Build the market clock before you read a price bar
  24. 1991A construction audit of the long-horizon trading index
  25. 1991Independent formula timers kept as a testable combination
  26. 1992When identical TRIN prints come from different pairings
  27. 1992Grade closing tick before a next-session breadth hypothesis
  28. 1992Noncumulative advance-decline swing confirmation
  29. 1992Five-day sum construction of the trading index
  30. 1992Daily closing-trin extremes and next-day direction
  31. 1992A three-layer audit: regime, breadth, and group RSI
  32. 1992Constructing a nine-state trend, momentum, and breadth score
  33. 1993Constructing a market-volume-impact rating from nested averages
  34. 1993When advance-decline confirmation counts the wrong universe
  35. 1993Constructing breadth momentum from advance-decline smoothing
  36. 1993Constructing a cumulative market-thrust line
  37. 1994Three-horizon construction of the Haurlan index
  38. 1994Checklist-gated session entry in 1993 index futures
  39. 1994Read one advance-decline pair through three windows
  40. 1994Constructing calibrated market-breadth summation indexes
  41. 1994Constructing a two-speed advance-decline oscillator and a calibrated summation
  42. 1995NYSE tick extremes and candlestick reversal entries
  43. 1995Assembling range, breadth, and a stored stop into one procedure
  44. 1995Restating market breadth timing rules as ratios
  45. 1995Constructing breadth ratio gates after lookback drawdowns
  46. 1995Building a short-range breadth and price oscillator
  47. 1996Constructing a smoothed advance-decline trend filter
  48. 1996Smoothed advance-decline alerts at the 1987 and 1990 turning points
  49. 1996Constructing breadth, RSI, and stochastic range filters
  50. 1996New-high and new-low counts as a breadth construction
  51. 1996Constructing the four-input breadth-volume ratio
  52. 1996Constructing the McClellan oscillator and a calibrated summation index
  53. 1996Declare the oscillator seed, then calibrate only the summation index
  54. 1997Three-gate centered strength in market-breadth construction
  55. 1997Daily advance-decline and new-high new-low breadth signals
  56. 1999Index-fund positions as a majority-vote committee
  57. 2000Tick, tiki and TRIN as a three-layer session confirmation stack
  58. 2000Constructing an advance-decline oscillator from one listed tape
  59. 2001Market breadth, beta, and volume-price confirmation
  60. 2001Regime context from relative venue volume, breadth, and intermarket spreads
  61. 2002When NYSE breadth misreads operating-stock participation
  62. 2003Two-gate breadth divergence and a trend filter for rally tops
  63. 2003Market internals confirm or diverge from the index
  64. 2004Constructing the McClellan oscillator and summation index
  65. 2005Intraday index-futures divergence as a three-part session hypothesis
  66. 2005Breadth summation levels as a short-term signal filter
  67. 2005Checking trend versus range with breadth and divergence
  68. 2011Constructing a Nasdaq hi-lo index from highs, lows, and issues traded
  69. 2013Cumulative advance-decline versus a one-year average
  70. 2013A one-year breadth average as a participation gate
  71. 2015Falsifying a healthy correction with breadth and support
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