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Giant move brewing, which way?


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#1 tommyt

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Posted 15 October 2009 - 04:55 PM

The Mc Osc has made a series of small changes around the 0 line = summation sideways. The mkt is ready to:

A) super blowoff
B) correct
C) neither, continue grinding up

#1

#2 andiron

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Posted 15 October 2009 - 05:02 PM

80 pts in 8 days, that ain't melt up??

#3 qqqqtrdr

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Posted 15 October 2009 - 05:08 PM

The Mc Osc has made a series of small changes around the 0 line = summation sideways. The mkt is ready to:

A) super blowoff
B) correct
C) neither, continue grinding up

#1


McOsc so far has been against the super blowoff scenario.... It can happen...
10-day Equity put call ratio is now at .55.... This has had the lowest number of puts since the top in 2007.
10-day CBOE Put/Call Ratio is getting into the area that is overbought also.

I think we correct from here, but McClellan Summation trend is bucking the overall price trend and saying the trend should be down..... Volume is continually shrinking.

I think the rally is dependent now only on the falling dollar, which since inflation is starting to raise its ugly head again, I think we are at the bottom there...

Barry

#4 arbman

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Posted 15 October 2009 - 05:11 PM

The Mc Osc has made a series of small changes around the 0 line = summation sideways. The mkt is ready to:

A) super blowoff
B) correct
C) neither, continue grinding up

#1


I do not think we have a breadth expansion in this last move AT ALL.

This entire surge from last week should be given back very soon actually, it feels like an OpEx option gunning...

#5 fib_1618

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Posted 15 October 2009 - 05:11 PM

What does the McClellan Oscillator measure? What does the McClellan Summation Index measure? Knowing the answer to these two questions will help give the most probable outcome....or at least I will have a starting point to work from in my effort to help in ascertaining an answer (assuming, of course, if you want my take to begin with). Fib

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#6 arbman

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Posted 15 October 2009 - 05:32 PM

What does the McClellan Oscillator measure?

What does the McClellan Summation Index measure?

Knowing the answer to these two questions will help give the most probable outcome....or at least I will have a starting point to work from in my effort to help in ascertaining an answer (assuming, of course, if you want my take to begin with).

Fib


From what I understand technically, it measures the 20 day surge within 40 days, or macd(40,20,1). It is an oscillator and it goes to show us just like the breadth divergence we had from the Intel's gap up that this final blow off is not broad enough...

http://stockcharts.com/c-sc/sc?s=$NYAD&p=D&b=5&g=0&i=p33568000844&are=3924&.png

You could also apply it to as a volume oscillator...

http://stockcharts.com/c-sc/sc?s=$NYUD&p=D&b=5&g=0&i=p33568000844&are=1874&.png

This slight divergence in between the volume vs the breadth goes to show that the advance is selective, even though we had quite a bit issue making new highs...

We should not just reverse this move, but I think the composition of the advance, or energy leadership by a great margin, is also conclusive in my opinion that this move is exhausted to the upside. Yet again, you may see the price spiking and drifting higher for a few more days.

I think it is a matter of one or two day speculative surge to have a very sharp reversal...

#7 IYB

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Posted 15 October 2009 - 06:14 PM

Here's a clue as to what's going on and what McO is sayin' - breadth (NetA) versus price (Px)...... ;) [attachment=13527:000109.png]
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

#8 dadook

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Posted 15 October 2009 - 06:52 PM

What does the McClellan Oscillator measure?

What does the McClellan Summation Index measure?

Knowing the answer to these two questions will help give the most probable outcome....or at least I will have a starting point to work from in my effort to help in ascertaining an answer (assuming, of course, if you want my take to begin with).

Fib



Fib, I would appreciate your take. Thx

#9 fib_1618

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Posted 15 October 2009 - 06:55 PM

OK Arb...thanks for the response.

I like to try to keep things as simple as possible when it comes to indicators. Although the math behind many analytical tools can be complex, what this or that does in direct relation to price itself is all that matters.

With this in mind, here's how I like to look at the McClellan's:

The information for both of these measures come from the cumulative A/D or U/D lines themselves. So knowing the direction of this same cumulative breadth and volume information is first and foremost in understanding what the Oscillator and Summation Index are providing us analytically at a glance.

With this same information, one then applies a 19 day EMA (10% Trend) as a short term moving average of this same cumulative total, and a 39 day EMA (5% Trend) to measure the intermediate term time frame. This would be the same concept as applying both of these EMA's (or like many do, a 20 day and 50 day EMA) to any or all price pattern sequences to help us in ascertaining direction on two different time scales. Knowing then where the cumulative line is in direct relation to these EMA's then provides clarity on the direction of money flow itself...that is...the fuel that is in the system that can be used to move stock prices either higher or lower.

OK...now that's out of the way...

The McClellan Oscillator measures the SPEED in which these two EMA's are either moving towards or away from each other. So when the Oscillator is at the zero line, this tells us that the net gain (or loss) between the two "trend lines" is balanced (as in there is balance between buyers and sellers) at that one particular point in time. So when the MCO is above the zero line, the bulls are in control, and vice versa when this accelerometer is below the zero line.

The McClellan Summation Index measures the DISTANCE between these same EMA's. So when the Summation Index is at the zero line, the 19 day and 39 day EMA's are literally crossing each other depending on the direction of the Summation Index itself. Going below the zero line then would have the 19 day crossing below the 39 day and vice versa when the MCSUM moves above zero. This would also mean that the zero line shows us that there is intermediate term balance between buyers and sellers.

Now, with these basics out of the way, here's one interpretation of the current numbers:

With the MCSUM as high as it is, it is very difficult for the short and intermediate term EMA's to move further apart as it would be as it would if you stretched a rubber band to the point of breaking. But at the same time, it would be even more difficult for price to just collapse since there is so much liquidity either coming in or remaining in the market that will generally keep prices buoyant. In other words, it will take time for this high amount of imbalance to correct itself, and because of this, prices can continue to move higher in spite of the MCSUM moving either sideways or toward its zero line to correct this same imbalance.

So...based on this...it's highly unlikely to see a blow off, or a parabolic move, because these events can only happen when there is a sharp and dramatic shift in sentiment resulting from a change in money flow balance between buyers and sellers. This would also mean that, more times than not, these type of events will only happen when the MCSUM crosses or is within 250 points of its zero line.

Correction? Possible. However, with the A/D and U/D lines making higher highs, and with the MCSUM as high as it is (the distance between the EMA's is constant), this kind of event will either be a high level consolidation or (as we have seen now for the last several months) quick and hard wash outs before higher highs are seen once again.

Griding up. Probable. In fact, this has been the most likely outcome since August and continues today. Just like in a price pattern, the longer a TREND is moving in one direction, the longer the two measured EMA's will remain constant in this same direction. Under these conditions then, any sell signals given are really HOLD signals (hint for IYB), and based on what happens next, THEN you can make your decision on positioning...slowly, but surely.

The bottom line to all of this is that the trend is your friend, and until money flow moves in the opposite direction, there's no sense in trying to be a hero in picking a top as the percentages show you will fail in this effort. Better to wait until there's enough of an internal breakdown first before allowing your hard earned money to be exposed to a possible top in the making. The market will do this in its own time, its own terms, and it really doesn't care what you think it should do...and when.

I hope I was helpful in this limited amount of time given.

Best
Fib

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Wise men don't need advice. Fools won't take it. - Benjamin Franklin

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#10 viccarter

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Posted 15 October 2009 - 07:11 PM

Great post Fib. Thank for taking time to explain your thoughts.