McClellan Oscillator Confirms Downtrend Still On!
November 27, 2009
– Comments (4)
People get all wrapped up in the pyrotechnics of TA, so to simplify things a touch, we have the McClellan Oscillator and Summation Indexes which will tell us when the downtrend that has just recently started, will in fact end. To get to the point quickly, so as to be as clear as possible, the downtrend doesn't EVER end until the readings on these two Indexes actually bottom in severely negative territory and then actually tick up. From the looks of the current graph, that could take awhile. A nice stroll over the mountains, a weekend jaunt to Staadt or Banf would be in order, to pass the time and keep the powder dry for closing shorts that are now underway and will need time to resolve on their own. The biggest mistake that can be made in trading now, is to close these short positions too early and then not be able to scramble back into them later on. Patience, patience, and more patience. It is the meat of investing.
Getting back to the technicals for a second, and in a manner of market fascination, this is now the second or third time that we have seen this 'noodle wave' form shortly before steep declines. There was a very clear bent noodle pattern that formed right before the May decline, and the very same 'noodle wave' appeared before the June-July decline. I do have to admit, I have never seen this particular wave form ever before, but it seems to be making it's appearance the moment before very large selloffs. Does anyone have any theory or explanation for this wave?
http://stockcharts.com/charts/indices/McSumNYSE.html
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