Wednesday, October 12, 2011

EOD Update [11:05 PM Update - McClellan Breath Thrust]

[11:05 PM Update - McClellan Breath Thrust]

Is an extended advance in store for the stock market? From Stockcharts.com

Breadth Thrusts
A breadth thrust occurs when the McClellan Oscillator surges from deep negative readings to strong positive readings. Typically, the indicator will move from below -50 and exceed +50 for a +100 point thrust. A breadth thrust signals a surge in bullish breadth that can lead to an extended advance. Not all breadth thrusts foreshadow extended advances, but most important lows are marked by a sharp surge in breadth. A breadth thrust is enhanced when preceded by a bullish divergence
The next chart shows the McClellan Oscillator foreshadowing a bottom in February. The McClellan Oscillator hit its low in late January, but the NY Composite moved to a new low in early February. With the McClellan Oscillator forming a higher low, a bullish divergence formed ahead of the breadth thrust. The bullish divergence warned of a possible trend reversal and the breadth thrust from -70 to +50 (+120) confirmed the reversal. The McClellan Oscillator peaked in early March and formed a bearish divergence, but the NY Composite continued higher into mid April.
From StockCharts.com
Now take a look at the current NYA below. A positive divergence followed by a breadth thrust near what should be considered a significant bottom.
NYA




EOD Update

Late day for me today so this will be short. The past view days I have been counting squiggles trying to figure out end of this first wave up. Many things lined up today to indicate to me that there is a pretty good chance this occurred at 1220, which falls within the range that I was looking for.

The 15 and 30 min MACD are sporting -ve divergences as well.

Should wave 2 down have started today, I'll be watching the 50 day SMA at 1174 and then the 20 day SMA at 1166.
15 Min
For the most part I can account for all waves and with the late day reversal breaking through the trendline, there is a good chance this is complete.

Notice I do have an alternate thought, being that this may still have only completed wave 3. If this alternate plays out, I would expect wave 4 to drop no lower than 1190, which is the previous subwave 4.

RUT - 15 min
RUT counts as an impulse wave that looks like a diagonal.


VIX- Daily
I was watching for VIX to hit 30 just like it did the previous two times after breaking below it's 20 day SMA. The equity buy signal obviously worked this time.


VIX - 15 min
The VIX sports a nice clean five waves down with the bounce late in the day along with the 15 min +ve MACD divergence. Let's see if it has any legs.
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