Do the Oscillators Have a Message for Us?

Today, let's look at a short-term indicator we follow.  From our chart showing the oscillators we use to measure the state of the market (below), we see that the 21-Day Oscillator (orange line) moved into the very high level of overbought a few weeks ago.  As is often the case, the overall market has started a correction, but now you see the McClellan Oscillator (blue line) back down in the first level of oversold.  Sometimes that can start a rally, but until the 21-Day Oscillator (orange line) also comes down to that -100 line, it is not enough of a recoil to consistently expect a lasting rally.

You can also see that the 21-Day Oscillator (orange line) has resided in the area above the neutral 0 line for most of the time since that low in October of last year...and that could continue, but before we can us this a sufficient evidence, we'll need it to come at least under the -100 line.  Even then, it would need some other longer-term signals before we could believe all the threatening clouds have left the picture.

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.