Wednesday, February 06, 2008

McClellan Oscillator

I was trying to remember which blogger had talked about the McClellan Oscillator but couldn't find the reference post (Sorry!). This is an indicator which I had overlooked in the past, but is another useful tool (if a little whipsawy). The crossover in the zero line gives an indication of bullish/bearish strength in the market - although given the whipsaw one should perhaps wait for confirmation on a move past +/-10.

After Tuesday's selling both the Nasdaq and NYSE Oscillators are (holding) bullish - but another day of selling might change that.

Of the market internals I do follow, the Percentage of Stocks Above the 50-day MA started to crack (it is usually the first to do so). However, the bullish divergence in its MACD holds with an overall technical picture which is net bullish. The other market internals; Bullish Percents and McClellan Summation indices, still support the January bottom.

The S&P is doing its best to map out what I thought would happen over the coming weeks. This is the easy part - what happens once it gets to January lows is more tricky and much will depend on the state of market internals (such as the ones discussed above) when it gets there.