2100NEWS Crypto Market Breadth Survey

Since the beginning of September, crypto markets have experienced significant changes which is a positive sign that we could be nearing the end of this bottom process.  The percent of DA above their 50-days EMA have changed the slope to positive but still signaling a short-term oversold condition. A breadth statistic is showing that a change in market direction is likely. Ether, NWSCo100, and NWLS100 have signs of stronger upside momentum.

Analysis of Market Direction… acumen knowing when to “hold ’em when to fold up, when to walk away and when to run. Timing is Everything!

*Breadth indicators are powerful technical analysis tools that gauge the direction of the market and help determine if it’s bullish, bearish or neutral. They offer a different perspective on the markets that can’t be seen through other indicators by analyzing the degree of participation in an advance or a decline to see whether or not an uptrend or downtrend is broad-based and therefore likely to continue. The 2100NEWS DA Factor Indexes were developed to show that different groups of Digital Assets behave differently in certain market conditions. Crypto Intermarket analysis is a branch of technical analysis that examines the correlations between four major factors: Coins, Tokens, Ehtereum based, and not Ethereum based Tokens. Chartists can use these relationships to identify the stage of the business cycle and improve their forecasting abilities. We use a combination of several methods and look for confluence and increase their odds.

Since the beginning of September, and especially in recent days, crypto markets have experienced significant changes which is a positive sign that we could be nearing the end of this bottom process. The shy start of the ALT season has been showing for two weeks, it means that Bitcoin is being sold to buy ALT coins. Bitcoin dominance was dropping out of a multi-month formation. After four months of consolidation, or even falling, the first signs of change began to emerge. In such a situation, markets were not expected to be driven by new inflows of money from new investors, but rather by the redistribution of investors within the crypto ecosystem.  We need to be aware that the weight of Bitcoin represents near 70% of the crypto market’s capitalization.  The ALT season can be a brake on NWST1100 growth, but we expect the positive atmosphere in the remaining indexes to move the NWST1100 higher. For the investor timing is everything. This time the start of ALT season is likely, The survey below shows. It looks at the crypto market breadth indicators and leading and the most important representatives during the ALT season.

The percentage of DA trading above 50 days EMA

The chart below compares the percentage of DA trading above 50 days EMA for:

  1. 100 Large-caps members of NWSL100 (top box)
  2. 1100 members of NWST1100
  3. 100 Ethereum Tokens members of NWSET100
  4. 100 Coins members of NWSCo100 (bottom box)

over the last 10 months. All four A50R lines had dipped below 30 signaling a short-term oversold condition but since the beginning of September, lines have changed the slope.

*The percentage of digital assets trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for the short-medium term timeframe. The percent of DA above their 50-days EMA is best suited for overbought and oversold levels. Because of its volatility, this indicator will move to overbought and oversold levels more often than the indicators based on longer moving averages. In general, readings above 70% are deemed overbought and readings below 30% are deemed oversold.

The chart above shows the AD Volume Line of the Coin Index (NWSCo100). Looking at the chart below we can see AD Volume Line of Large-caps represented by Large Cap Index (NWSL100). The market is considered weak when the AD Volume Line moves to new lows along with the underlying index. This shows strong selling pressure. We can see on the charts, that selling pressure has been waning and the decline was nearing an end at the beginning of September. ADVL 10-day EMA line changed the slope to positive. We are waiting for crossing ADVL 25-day EMA which would confirm a rally.

*Looking at the breadth charts ADVP is a breadth statistic based on Net Advancing Volume, which is the volume of advancing digital assets less the volume of declining. Because it is based on volume, the AD Volume Line measures the buying and selling pressure behind an advance or a decline. The volume behind advancing Digital Assets represents buying pressure, while the volume behind declining Digital Assets represents selling pressure. An AD Volume Line that rises and records new highs along with the underlying index shows strong buying pressure. This is bullish. An AD Volume Line that fails to keep up with the underlying index and fails to confirm new highs reflects weakness in buying pressure. Market strength is undermined when buying pressure fails to confirm an advance.

The chart below includes two breadth indicators that work together.  The area plots the McClellan Summation Index.  That’s a long term measure of market breadth.  [See explanation of both indicators below]  The Summation Index is positive when it’s above the zero line.  Drops below that zero line are negative.  Crossings above the zero line are positive signals.  That happened at the start of this year.  The lines have been flattening out over the past month. The histogram is the McClellan Oscillator. That’s a short-term measure of market breadth. The two lines work together. Oscillator moves below zero cause the Summation Index to drop.  The Oscillator has spent most of the July below zero which caused the Summation Index to weaken.  Oscillator moves above zero and turns the Summation Index higher. The upturn in the McClellan Oscillator is boosting its Summation Index and signals start of ALT season, the Coin markets started an uptrend.

FOOTNOTE… The McClellan Oscillator is based on net advances of daily stock gainers minus daily losers.  It’s derived by subtracting a 39-day EMA of net advances from its 19-day EMA.  It’s a short-term momentum indicator of market breadth.  The McClellan Summation Index is a running cumulative total of the Oscillator.  And is a longer-term measure of NWST1100 breadth.  Both indicators were developed by Sherman and Marian McClellan.

Charts below compare the most important representatives during the ALT season:

  1. Ether
  2. 2100NEWS Digital Assets Coin Index (NWSC100)
  3. 2100NEWS Digital Assets 100 Large Cap Index (NWSL100)

 

Ether has been lagging behind Bitcoin for four months. A number of reasons have been given for its weaker performance. A bullish divergence forms when the PPO Line fails to record a lower low along with the index. This means selling pressure is waning and the decline may be nearing an end.

 

2100NEWS Digital Assets Coin Index (NWSCo100)

Major DA indexes are falling sharply and suffering big losses. The chart below shows a steep selloff, the NWSCo100 vs. Bitcoin and Ether was bearing down from April to September.

The indicators give us the following signals: we can see that RSI is bullish – over 60, the brown PPO histogram bars could turn more positive in the next few days.  As a consequence, the PPO lines are close to crossing above 0. That would be a sign of stronger upside momentum.

2100NEWS Digital Assets 100 Large Cap Index (NWSL100)

The indicators give us similar signals of stronger upside momentum as for NWSCo100: we can see that RSI is bullish – over 60, the brown PPO histogram bars sloping positively.  As a consequence, the PPO lines are close to crossing above 0.

 


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