Still Waiting on a Correction?

In relation to our title, so are we.  But in some ways we also like that old maxim that says if it looks like a duck, walks like a duck, and quacks like a duck, we believe it is a duck.

We are getting close to that period (May to October) where the stock market takes at least a breather.  Our short-term "caution" signal came early in February, and our thoughts at that time were that we would know in 3 months or so how accurate this "yellow" light would be.  So we have two months down, and one to go on that initial statement.

Now, let's look a little deeper into the action of the stock market.  Yesterday's market was really screwy, in our opinion.  They said it was up, but it didn't feel like it was up in our view.  Let's look at how some of the barometers were acting, especially on the typically more growth oriented NASDAQ.

Right after we got the "yellow" light, the stock market corrected, but then March came in like a mighty breeze and jettisoned the indices to new highs.  If you look at the McClellan Oscillator (in the first chart) above, you can see that it has now been pushed back to the threshold of the -50 oversold zone.  At the same time, however, the Advance/Decline Line moved up sharply until about a month ago, and has now been in a holding pattern for the last few weeks.

It looks like this duck may be walking and quacking.

Don Hays

If you are a subscriber to, click here to read our recent reports.  If you would like to learn more about the research and commentary offered by Hays Advisory, click here.

Please see important disclosures at the bottom of this page.