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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: IndexTrader who wrote (2849)	10/10/2000 11:09:05 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Susun, there were sings of the start of capitulation today in leadership stocks, If we see some serious selling in the next 2 days then we could be at an intermediate low. It will probably take another week or two to get the VIX up to 35 or 40 or 45, but this is more of a nasd even. as Cramer pointed out if you are in the S&P non tech name like XOM, GE, MRK, PG etc. you've been just fine. this is the contrast between Oct 1998, oct 1997 etc. Peter E has some relevant comments tonight ------------- Each day the stock market looks a little bit uglier. Today was no exception. There is much talk about the market's oversold condition. We would like to comment on that. Today, the McClellan oscillator closed at -111.4 . For a few decades, market technicians have learned that a reading below -100 on the McClellan oscillator should be considered very oversold. One of the reasons that we keep track of both the "old fashioned" McClellan oscillator and the ratio adjusted McClellan oscillator is that the greater number of issues now trading on the New York Stock Exchange make a significant difference between oscillator readings today compared to oscillator readings of 15-20 years ago. For example, today while the regular McClellan oscillator closed at -111.4, the ratio adjusted McClellan oscillator closed at -39.4. We went back to 1984 to see what the equivalent reading would be at that time to the current reading of -39.4 on the ratio adjusted McClellan. The answer is a reading of around -68 in 1984 would be the equivalent of a current reading of - 39 to -40 on the ratio adjusted McClellan. No one would have told you in 1984 that a -68 reading on the McClellan oscillator was deeply oversold. It follows that no one should tell you today that a reading of -39.4 on the ratio adjusted oscillator or a reading of -111.4 on the normal McClellan oscillator is deeply oversold. It's as simple as that. So much for the McClellan oscillator. How about our favorite overbought-oversold indicator, the Trading Index or Arms Index. We see almost the same story there. Today's reading on the Open 10 TRIN was 0.911. The simple 10 TRIN closed at 0.947 while our own New 10 TRIN close at 1.12. Not only is the Open 10 TRIN not oversold, it is closer to being overbought than oversold. Yesterday, we gave you a nominal 20 day projection for the New York Composite Index. Those projections have not yet been met. We think there is an excellent chance now that those projections will at least be met prior to any serious rally attempt. We can also make a case that the Dow Jones Industrial Average gave a preliminary nominal 20 week downside closing price projection today calling for 9798 ±155 points. That projection has not been confirmed.