The NYSE Composite Index consists of almost 2,000 U.S. and non-U.S. stocks. It measures the performance and changes in market value of all common stocks listed on the NYSE, including ADRs, REITs and tracking stocks. Those changes are adjusted to eliminate the effects of capitalization changes, along with new listings and delistings.
It’s also weighted, using a free-floating market capitalization and calculated on both total return and price basis.
In January 2003, the NYSE reconstructed the index using a new methodology that is rule-based and fully transparent. And after January 2003, all ETFs, derivatives, closed-end funds, and limited partnerships were excluded from the index.
Aside from the Wilshire 5000, which actually now contains over 6,500 stocks and many of the lightly traded, smaller cap stocks, the NYSE Composite (^NYA) is the second-largest index - and I believe is the truest representation of the “stock market.”
Let’s take a look at a longer-... weekly chart of the ^NYA today…
From A 60% Drop To A 48% Surge
Having reached a high of 10,387 in October 2007, the index fell almost 60% over the next 15 months before bottoming along with the rest of the indexes.
Since then, it’s been one of the better-performing indexes, rallying 48% in just three months. Sounds impressive, right?
As you’ll notice on the chart, though, it still hasn’t even reached the 38% Fibonacci retracement level of the bear market, which is around 6,550.
You’ll notice that from October 2008 through January 2009, there was a lot of “distribution&am... before the index finally bottomed out in March. These distribution areas are a form of resistance and the 38% retracement level coincides with the top of this distribution area.
In addition, the 55-week (another Fibonacci number) moving average also comes in around the 38% retracement level. What does this mean?
Simply put, if the ^NYA gets up to the 6,550 level, it will run into three different areas of resistance. If nothing else, I’d expect it to undergo a correction from that area. However, a weekly close above that level should take it up to at least the 50% retracement level, if not higher.
Disclosure: No positions