The McClellan Oscillator is a market breadth indicator that is excellent for measuring when the Market is oversold. At levels of -150 and below the Market tends to put in a good sized bottom, as circled in black on the chart below. Currently the McClellan Oscillator is below -150 indicating that the markets are likely putting in a bottom within the next few days (if not today).
Tuesday, June 24, 2014
The Market had a nice reversal today, making a lot of bears very excited. However, the problem with this recent sell off, is it exerted a lot of selling pressure. The chart below is the S&P 500 along with the TRIN indicator. The TRIN indicator is excellent for measuring when selling pressure has been exhausted. This occurs when the indicator goes above 2, which happened today (circled in red). Notice once the TRIN goes above 2, the Market tends to put in a good bottom give or take a few days (highlighted with red rectangles). Based on this indicator the Market sell off may be short lived.
Thursday, June 19, 2014
In early May I hinted that the Market was likely to melt up. Since then the Market has been quite impressive and has done exactly that. The chart below is the S&P 500 and the VIX with 50-1 Bollinger Band settings, which was shown to me by Tom McClellan. When the VIX is below its 50-1 Bollinger Band(shown on the chart below), the Market is invincible to the Bears. For there to be any HOPES of a moderate/significant pull back the VIX needs to go above its middle Bollinger Band. Thanks to the troubles in the Middle East the VIX attempted to break above its middle Bollinger Band, but it just could not reach it before getting slapped down hard by the FOMC minutes yesterday. For those cynical and pessimistic Bears, who (sickly) thrive on the Market pulling back, all your hope lies in the chart below.
Wednesday, June 18, 2014
Yesterday I talked about an overbought pattern that popped up on Tesla's stock chart. The technical signal worked like a charm as $TSLA pulled back ~2% today.The exact pattern with minor differences (unnoticeable to many of you) has popped up in Solar City. The chart below is $SCTY's chart, that shows the last two days have led the stock to be overbought in a short term as shown in red (the stock has pierced the upper Bollinger Band two days in a row). It will be interesting to see if this pattern will repeat itself and $SCTY will pullback tomorrow just like $TSLA did yesterday. Make sure to refer to yesterday's post to get a deeper understanding of this signal.