McClellan summation shuffle :
Wednesday the 17 day oscillator recovered to near zero. However
the McClellan oscillator was still quite negative, and on the Nasdaq both were quite negative. As this is an aberration from previous slammation patterns, I passed.
The warning given by the declining three peak pattern, which I pointed out on April 19th, did result in a significant corrective process.
Now we have two things the summation index may be saying.
There is an approximately 200 days cycle bottom from the initial thrust peak of the rally phase. There have been three instances where that first peak was particularly strong, over 3000:
2-5-76 3601 ; 3-14-86 3225 ; 3-8-91 3127 ; and now 7-17-97 4093.
The cycle bottoms occurred at 11-10-76 with the summation at 495 two days later, 190 days after the peak; 12-31-86 at 302, 203 days after the peak; and 12-12-91 at 273, 195 days after the peak.
In 1963, the only prior instance where the triple declining summation pattern occurred in a compressed period of time, the summation index bottomed out at 343 in November, 208 days after the first peak.
So far, we have a low in the NYA on 4-27-98 at a price of 563.05
which is 196 days after the peak. The a-d lines are at a new low for this move, at 215 days.
The key here is the summation index itself being close to zero;
it closed Friday at 259.
If this is a correction and not the beginning of a bear market the
summation should hold zero and the 200 day cycle puts us in a cycle bottom area. The strength of the initial peak indicates that this is a
correction, not the beginning of a bear (at least for now). So we
should watch for clues with a bias for a resolution to the upside.
The McClellan oscillator itself is right on a rising trendline from 4-27-98 at -271 to -132 on 5-18-98. If it holds here, and that is a big if, that could be the clue we need.
Remember, it is not a wise thing to try to catch falling knives in the market when it is in a bad mood. The a-d lines on both markets are making new lows, and the NY a-d line has slipped under the high it
made October 7 by 1,366 declines, not a good thing.
Things may become clearer after tomorrow. Must respect what the market says.
Vitas
All disclaimers apply. |
