I like to watch the behavior of the number of issues traded on the New York Stock Exchange that advance in price each day. This number together with its 10 day moving average often provides early warnings of changes in trend.
The daily chart above shows the number of NYSE advancing issues and its 10 day moving average (in red). You can see that the daily number has made three higher lows, the second of which coincided with last week's low at 1172 in the S&P futures. The 10 day moving avergage has also turned upward. I think the stage is being set for an important divergence if the S&P futures drop to 1159 but the daily and 10 day moving averages stay above their recent lows. Such a divergence would be a very bullish indication. Coupled with the very bearish short term trading sentiment it would indicate a big rally just ahead.
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