1) Short Term. A 3-day exponential moving average is taken of the net NYSE advances over declines, measuring the short term condition of the market. When this index moves above +100, a market short term buy signal is generated. The signal is in effect until the market drops below -150 at which time a sell signal is generated. The sell signal remains in effect until the index moves above +100 again.
2) Intermediate Term. Same as above but with a 20-day exponential moving average. This index is considered the most important of the three. Market buys and sells are determined in this index by the crossing of trend lines or support-resistance levels depending on the particular market in question. For example, when the market is basing out in preparation for an uptrend, a resistance level may be set up. Once its value is determined, buy and sell signals could be generated for that market.
3) Long Term. Same as above except for a 200-day exponential moving average. Useful for determining trends but not for signals.
