NYMO McClellan Oscillator Daily Chart Market Direction Tool

The NYMO is another useful tool to help identify near-term market tops and bottoms. The red circles show the market tops and the green circles show the market bottoms.  When the NYMO moves above +30 especially above +50, it is time to lighten up on the long positions and bring on shorts and downside protection.  Conversely, as the NYMO drops, and moves to -30 and lower, it is time to lighten up on short positions and bring on longs in preparation for a rally move higher.  Over the last two weeks, a near-term market top was identified at SPX 1475 with the +60 number.  The broad indexes sold off since then, meandering lower into the -45 number that marked the bottom over the last couple days.

Note how the NYMO makes a lower low as compared to late August.  The indicators, however, are weak and bleak (red lines). The ROC is positively diverged and created the NYMO bounce and market rally over the last day or so, but, the weak RSI, MACD and stochastics want to see a lower low print for the NYMO.  Once the lower low prints the indicators will likely line up with positive divergence across the board that can lead to a several day rally.  Projection is for continued market weakness looking for a NYMO print under -50 that will identify a near-term bottom for the broad indexes.  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.