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Categories:General Market Commentary
Market Breadth Analysis
South Africa 7.49%
8/4-SPDR Gold Trust is about 16% above its 200-day moving average. A 6% to 8% correction followed the previous four times it rose 13% to 16% above the 200-day line. Gold-mining stocks corrected more sharply in those periods.
Oversold conditions start at minus 40 and get deeply oversold at the minus 60 to minus 70 areas.Readings above +100 are considered overbought and below -100 oversold. Overbought and oversold readings may vary among indices and historical precedent. Buy signals are generated when the oscillator advances from oversold levels to positive territory. Sell signals are generated on declines from overbought to negative territory.
When oscillator closes almost unchanged it often leads to a big move one way or the other within two days.
Buy signals are typically generated when the McClellan Oscillator falls into the oversold area of -70 to -100 and then turns up. Sell signals are generated when the oscillator rises into the overbought area of +70 to +100 and then turns down.
If the oscillator goes beyond these areas (i.e., rises above +100 or falls below -100), it is a sign of an extremely overbought or oversold condition. These extreme readings are usually a sign of a continuation of the current trend.
For example, if the oscillator falls to -90 and turns up, a buy signal is generated. However, if the oscillator falls below -100, the market will probably trend lower during the next two or three weeks. You should postpone buying until the oscillator makes a series of rising bottoms or the market regains
Generally speaking, the line has to be above 50% to be in an uptrend. In other words, more than half of NYSE stocks need to be above their 200-day averages. But I prefer to use the 60% and 40% lines. During market corrections, it's not unusual for the black line to drop to 40% before turning back up again. Drops below 40% usual signal a bear market. Moves back above 60% reinstate the major uptrend. That's especially true after a bear market.-
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