Here's a look at the 50 index stocks and how are they placed from their averages. 28 stocks are above 200, 24 are above 50, 22 are above 50 and 200.
This can be converted into a rating scale which will immediately tell us the state of the market. It goes like this - Give 2 points to a stock if it is above 200, give 1 point if it is above 50, give -2 if it is below 200 and give -1 if it is below 50.
28 stocks are above 200 so we get 28*2 = 56
24 are above 50 so we get 24*1 = 24
22 are below 200 so we get 22*(-2) = -44
26 are below 50 so we get 26*(-1) = -26
Now, we add up all the points to arrive at a single figure, so
Take a look below
If all the 50 stocks are above 200 and also above 50 then we get a reading of +150. Similarly, if all the 50 stocks are below 200 and 50 then we get a reading of -150. These are the extremes of the market.
Currently, the reading is +10, so we are just around the neutral zone. Further, if say the reading is between +25 and +50 then we can call it mildly bullish and so on.
The advantage is that you just need to look at one number which will immediately tell us the state of the market.