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  • Diverging Indicators: Treat Them As Suggestions, Not Rules [View article]
    The McClellan Oscillator does tend to dip below 0 before the worst parts of the sell-offs. But an extreme high very typically comes before major moves down. If you look at the last year, you had highs (over 40) at the following points:

    Date Oscillator Market Action That Followed
    Feb. 1 70 9% decline over next 5 weeks
    May 15 40 15% decline over next 2 months
    Aug 30 60 31% decline over next 5 weeks
    Nov 1 100 25% decline over next 3 weeks
    Jan 2 108 ?

    I guess the moral of the story is a high reading means it's safe to be in the water, but the day it crosses 0, head for the beach.
    Jan 02 22:38 pm |Rating: 0 0
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