Checking In on the T2108 Chart

Reader N.B. sent me an email the other day, wondering how T2108 was faring. As you may recall, this chart shows the percentage of New York Stock Exchange stocks above their 40-day moving average. My theory has always been that when this reading is above 70%, the market is due for a fall, and when the number is below 30%, it's due for a rally.

But how has it held up?

I've included the NYSE Composite overlaid with T2108 below, just looking at the "buy" signals. We rallied Monday, of course, but we'll let that grade remain incomplete.

As for the other grades, they average about a C+, although the signals have been early more than flat-out wrong.

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Conclusions then? Like all indicators, this one surely isn't foolproof. However, it does have value. Used in conjunction with other signals, it's a nice addition to any methodology.

Today, the Nasdaq, Brunswick (BC - commentary - Cramer's Take), Helen of Troy (HELE - commentary - Cramer's Take), Kroll (KROL - commentary - Cramer's Take) and Delta Air Lines (DAL - commentary - Cramer's Take).

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Charts produced by TC2000, which is a registered trademark of Worden Brothers Inc.

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And that is the final word from the American Dental Association, where it's a cliche, but so true: People really are much more attractive when they're smiling. In fact, a good smile easily trumps just about any plastic surgery in the "looks-enhancement" department.

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Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes a daily technical analysis column for RealMoney.com and also produces a daily premium product for TheStreet.com called The Chartman's Top Stocks -- click here for a free two-week trial. While Gary cannot provide investment advice or recommendations, he invites you to send your feedback to [e-mail].