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mortiz

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Reply with quote  #1 
The weekly AD McClellan Oscillators (MCO) are suggesting the trend is changing from the corrective nature of the past several months.  The following MCOs are derived from Friday-over-Friday index price changes of their respective components.

First the NYA components, the common stocks traded on the NYSE. This weekly MCO indicator has been able to remain above zero for a few weeks now, a feat not seen in quite some time.



The weekly NYSE total market AD MCO (all issues) continues its constructive (for the bullish case) longer term pattern.



The weekly "uncommon" NYSE AD MCO is also suggesting the tide has turned from its liquidity problems over the past 15 months.  The uncommon NYSE components are those issues that are not common stocks, often referred to as the NYSE issues "polluting" the NYSE AD data.  For those who pay close attention to the action of this group of issues, they have an important story to tell.



The daily breadth indicators have been exhibiting promising behavior for the bullish case going forward (see Fib's posts over the past few weeks).  The weekly AD data is supporting those bullish implications by signaling the daily AD indicators' strength is likely more than a bear market rally in the liquidity domain.

FWIW

Randy
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GarySmith

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Reply with quote  #2 

As usual great work Randy. But to play the devil's advocate here, based on market action it seems the wormed turned two months ago.  Sometimes waiting for the weight of evidence to give an all clear can cause one to be late to the party.  Wasn't there a Zweig buy signal on March 18 and aren't these signals especially powerful coming after 15%+ declines in the market? 
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mss

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Reply with quote  #3 
Nice work Randy. Throwing my 2c worth in the pot.



It appears the first clue around 3/12 and confirmed May12. My old standby.
Best to you,
Scott
(mss)

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mortiz

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Reply with quote  #4 
Gary/Scott,

Thanks for the feed back, and I am total agreement mid-March was an excellent time to initiate intermediate term longs based upon a plethora of indicators, including with the Zweig Momentum thrust buy signal and Scott's Power Direction indicator (which did its usual fine job of nailing down the trend change).

The point of the longer term MCO updates, was to suggest that although many warning flags are currently in the air that have been reliable sell signals over the past several months, the weekly MCOs are now saying don't get too aggressive on the short side, other than for very short term hedges or trades.... with tight stops in place of course.

There is still work to be done for declaring all clear ahead for the long term positions (ratio adjusted AD McClellan Summations need to get comfortably above +500, etc).  A correction to keep the bulls honest at this point would be expected in the near term, but initial upside targets from several weeks ago suggest another 5% to 6% upside potential, then re-evaluate.

Gary: the Zweig momentum thrust was discussed in detail a couple years ago in this thread:

http://forums.technicalwatch.com/tool/post/fib_1618/vpost?id=1226364

There were 9:1 up-to-down volume days on 3-11-2008, 3-18-2008, and 4-1-2008, so I am assuming you are using the two U-D volume ratio above 9:1 events as a buy signal, in lieu of the more rare three event phenomenon in your reference to the 3-18-2008 Zweig momentum thrust buy signal.  I don't think we included the 15% price decline criterion in our past momentum thrust studies, but would be a worthwhile exercise for the "to do" list. 

Thanks for weighing in.

Randy


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swingtrader

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Reply with quote  #5 
Gary and Randy,

There were 3 9:1 up volume versus down volume days during the month of Nov. 2007.  My question is how does one differentiate those failed signals from the valid ones. I guess other technical tools  most be considered to reach conclusion. If so, what are the other consideration.s

Thanks!

-ST

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GarySmith

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Reply with quote  #6 

swingtrader, after being absent pretty much for over an entire decade,  Zweig's thrust signals began appearing in June 0f 06 and several more thereafter.  I believe there was also a valid signal in August of 07.  But you are right about the failed signal in November.  The November signal came after the market had already run up nearly 10% from its summer bottom and hence not as effective.  Some would even consider it was an extention and part of the original summer signal.  What's nice about the recent March 18 signal is it's the first, at least as best as I can recall, since the 80s that was triggered after a 15%+ decline in the Dow.  In the past, when triggered after 15%+ declines in the Dow, Zweig's thrust signals have ended many bear markets, 62, 66, 70, 80, 82. Actually if you fudge a bit it also ended the mini- three month bear and 20% decline of 1998 brought on by the Long Term Capital fiasco.   I say fudge because the second  of the two part 9 to 1 day came in at 8.73 to 1 on October 15, close enough for me to consider it a valid signal.  I would love to see Randy test its effectiveness  after 15%+ declines and with no other filters.
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