Without giving away the secret formula, what goes into your buying power and selling pressure indexes?
Well, the buying power index is a measurement of demand, based on the law of supply and demand. So the ingredients that go into it are upside volume and what we refer to as points gained. Points gained are simply a very simple calculation of the amount of price change in every stock that advances for the day.
And you only count operating companies, not closed-end funds? Or bond funds, REITs, things like that?
We do now. Back in the 1980s and so on, there were not the distortions in the listings on the New York Stock Exchange that there are today.In fact, you recently said we should not be calling it the NY Stock Exchange. More than half of the companies actually aren't operating companies -- now NY 'Fund' Exchange is more like it. Yeah, that is the thing that most investors are not aware of. That more than 52% of all the issues traded on the NYSE are not domestic common stocks. They are made up of closed-end bond funds. So those are issues that are actually bonds trading on the NYSE. There are real estate partnerships, REITs, a lot of ADRs and foreign stocks that don't necessarily represent our economy. For example, back in the days when the Japanese market was in an incredibly strong uptrend pattern, the ADRs such as Sony listed on the NYSE were creating quite a distortion, showing strength in our market that was really a reflection of strength of the Japanese market, rather than the U.S. market. As we saw this tendency of the NYSE to list more and more issues that were really not domestic common stocks, we felt the need to create a series of computations that excluded all of the things that could be considered to be distortions. So what we run our analyses on is what we call our operating companies-only statistics. For that, we create upside volume, downside volume, points gained or lost, advances and declines, new highs and lows, and a whole series of other indicators as well.