McClellan Over +150 for a Second Day, New Lows Expand Even as the S&P Hits a One-Month High

The McClellan Oscillator is the difference between a 19-day and 39-day
exponential moving average of (advancing issues - declining issues). Back in
my December 6th column I discussed the short-term bearish implications of a
McClellan reading over +200, something we hardly ever used to see but which
has begun occurring with increasing regularity in recent years (see long-term
chart). More recently, in my January 31st column, I discussed the fact that
two separate readings above +150 within a one-week time span has also been a
negative indication for the next few days. Today it's noteworthy that the
Oscillator closed over +150 on two consecutive sessions. This too has
generally negative implications for the short-term. The table below notes each
instance since 1995 in which the McClellan closed over +150 two consecutive
sessions, along with the S&P's performance by the time the McClellan fell back
under +100. While it sometimes can take a few days or more, note that in 21
out of 25 cases, the S&P was at a lower level when the McClellan fell back
under +100. While we shouldn't rule out the potential for further strength
short-term, the persistently high McClellan suggests it will most likely be a
rally to sell...

McClellan Over +150 Two Days Running
04/02/08... S&P500 ??? when McClellan <100
02/01/08... S&P500 -4.2% when McClellan <100
12/07/07... S&P500 -1.8% when McClellan <100
10/02/07... S&P500 -0.5% when McClellan <100
09/19/07... S&P500 -0.7% when McClellan <100
09/04/07... S&P500 -2.4% when McClellan <100
03/22/07... S&P500 -0.4% when McClellan <100
08/17/06... S&P500 +0.0% when McClellan <100
07/03/06... S&P500 -1.7% when McClellan <100
01/09/06... S&P500 -0.3% when McClellan <100
11/25/05... S&P500 -0.9% when McClellan <100
06/02/05... S&P500 -0.8% when McClellan <100
05/19/05... S&P500 -0.1% when McClellan <100
05/25/04... S&P500 +1.6% when McClellan <100(*)
09/03/03... S&P500 -0.3% when McClellan <100
04/23/03... S&P500 -2.2% when McClellan <100
11/04/02... S&P500 -1.5% when McClellan <100
08/16/02... S&P500 -1.2% when McClellan <100
12/29/00... S&P500 -1.9% when McClellan <100
01/10/00... S&P500 -1.3% when McClellan <100
11/01/99... S&P500 +1.4% when McClellan <100(*)
04/22/99... S&P500 -1.7% when McClellan <100
10/19/98... S&P500 +6.2% when McClellan <100(*)
09/29/98... S&P500 -7.5% when McClellan <100
05/05/97... S&P500 -0.1% when McClellan <100
08/05/96... S&P500 -0.0% when McClellan <100

Wednesday's increase in new 52-week lows on both the NYSE and NASDAQ is
particularly interesting considering the S&P and NDX both hit their highest
levels of the past month during Wednesday's session. That signals all is not
well beneath the surface, which usually meanslimited upside potential for the
S&P over the next three sessions. Every instance in which new 52-week lows
expanded on both exchanges and the NDX and SPX touched a one-month high are
noted in the table below. Note that the S&P's upside potential is typically
capped at the 0.5% level over the next few days. In only five cases out of the
last thirty, or 17% of the time did the S&P500 gain more than 0.5% three days
later. That's significantly worse than the S&P's at-any-time odds of 39% for a
gain of more than 0.5% over any three-day period...

SPX & NDX Both Hit a One-Month High,
New 52-week Lows Expand on Both Exchanges
04/02/08... S&P500 ??? three sessions later
12/11/07... S&P500 -0.7% three sessions later
10/11/07... S&P500 -1.0% three sessions later
10/09/07... S&P500 -0.2% three sessions later
07/16/07... S&P500 +0.2% three sessions later
07/12/07... S&P500 +0.1% three sessions later
06/01/07... S&P500 -1.2% three sessions later
05/23/07... S&P500 -0.3% three sessions later
05/04/07... S&P500 +0.5% three sessions later
04/17/07... S&P500 +0.9% three sessions later (*)
04/05/07... S&P500 -0.3% three sessions later
04/07/06... S&P500 -0.6% three sessions later
03/21/06... S&P500 +0.4% three sessions later
01/09/06... S&P500 -0.3% three sessions later
11/10/05... S&P500 -0.2% three sessions later
11/12/04... S&P500 -0.2% three sessions later
10/06/04... S&P500 -1.6% three sessions later
09/10/04... S&P500 -0.3% three sessions later
04/05/04... S&P500 -1.0% three sessions later
01/20/04... S&P500 +0.2% three sessions later
10/09/03... S&P500 +1.0% three sessions later (*)
08/22/03... S&P500 +0.4% three sessions later
03/17/03... S&P500 +1.5% three sessions later (*)
12/02/02... S&P500 -3.0% three sessions later
03/08/02... S&P500 -0.9% three sessions later
11/26/01... S&P500 -1.5% three sessions later
10/17/01... S&P500 +1.2% three sessions later (*)
05/22/01... S&P500 -2.4% three sessions later
08/24/00... S&P500 +0.1% three sessions later
08/22/00... S&P500 +0.6% three sessions later (*)
07/17/00... S&P500 -1.0% three sessions later

Categories : Archived EOD Commentary, End-of-Day Commentary

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