NYSE McClellan Hits Short-term Overbought Territory

The number of advancing issues outnumbered decliners for the sixth day in a
row Wednesday, sending the NYSE McClellan Oscillator into extreme territory
(over +200). Wednesday marked the second session with a McClellan over +150, a
sign overall conditions could turn choppy. The table below lists every
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. Note that in 23 out of 28 cases, or 82% of the time, the S&P was
at a lower level when the McClellan fell back under +100.

McClellan Over +150 Two Days Running
07/23/08... S&P500 ???
04/02/08... S&P500 -1.0% 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

One important point, however, is that occasionally it will take a number of
days (or even 1-2 weeks) before the McClellan drops back under +100. And it's
possible that could be the case this time around given the persistent
institutional buying seen recently. TICKscore closed at +9 Wednesday,
cumulative TICK +29,500, the sixth day in a row our NYSE TICK indicators have
settled in positive territory. Volume increased on the big board for the
second consecutive session as the S&P made higher highs. If the S&P is able to
trade above Wednesday's high on even heavier volume Thursday, a short-term buy
setup would be triggered.

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

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