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.
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