Wednesday, January 30, 2013

Bears Give A Warning Sign

On Sunday, I called for the markets to start pulling back this week, it looks like it may have started to crack to the downside. The $VIX is above its 5 & 10 EMA, therefore in the short term the VIX is in an uptrend (bears have control here). The bears also sent another warning sign today, they were able to bring the McClellan Oscillator below 0 (calculated by adding the stocks that were green minus those that are red every day). The chart below, is the McClellan Oscillator, which is now at -18. When the McClellan Oscillator is below 0 it sends the message that the bears are in charge. It is important to note, the structure the McClellan Oscillator made above 0 for the month of January, means the markets will probably end up making higher highs in the intermediate term (it is an overbought complex structure). But for now, the market and the McClellan Oscillator need to work off the overbought condition.