I'd like to see someone post a quantification of this observation. Its very simple. All you have to do is find the days when the MCO is near zero, then see what happens the next day. And then compare that to all strong move days and see if those days also had MCO near zero.
So...it's a lot of bunk, but you, yourself, haven't done this kind of "quantification" to come to this same conclusion?
Interesting...I wouldn't expect this from an engineer.
May I suggest that
you take the time and do the study yourself
before deciding whether there's any real merit to this nuance (or anything else for that matter) before chastising something in which many people have had a degree of success with? After all, every single analytical tool out there has its own rules and guidelines that allow many technicians to use them with a fair amount of accomplishment...once they learn how to use them properly. And like you said, it's an easy thing to do.
Here's the guideline and you can report back on it a year from now:
When the NYSE ratio adjusted or NASDAQ McClellan Oscillator generate a daily change of 4 points to none, one should expect a dramatic move in the major market averages in the next 2 trading sessions. The definition of a "dramatic move" would equate to a 1% change from the previous days close within this same 2 day period.
If you have more than 2 consecutive days of small point changes, the odds start to decrease that the daily move will be large, but times like this do suggest that a larger directional trending move might be developing from anywhere of 3% to 5% in amplitude.
There are other nuances to this, but let's leave it at that.
Oh, and by the way, more than 70% of the time the McClellan Oscillator can also give the direction of the small point move with a high degree of success as long as you apply the information diligently. I would call that pretty good odds.
Fib
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