Tuesday, May 12, 2020

NYMO McClellan Oscillator and NYA NYSE Composite Daily Charts

The NYMO, McClellan Oscillator, remains elevated, in the bull camp, for the last couple months, ever since the March bottom in the stock market. Traders and investors applaud and cheer the Federal Reserve and other central bankers for goosing the stock market higher with more easy money.

When the NYMO goes sub -60 (green circles) you have to look for a bottom in stocks and you can use the hourly charts and possie d to identify the low. When the NYMO is +60 and higher (red circles), your radar goes up for a top in the stock market like late March, mid-April and late April.

The NYMO prints +50 now at 26. You will have to decide if the +50 is close enough for government work, or, if the bulls have a bit more juice to move the NYMO above the red line. Any move higher simply brings the top closer. As equities recover off the March bottom, note the first top, then second top, both the NYMO and NYA printing higher highs. This tells you another high is coming in stocks and voila, it occurs in late April. That comes with the NYMO off the top. Now the NYA (stock market) runs higher again, not quite at the highs from a couple weeks ago but nearby, and note the NYMO trailing off again diverging away.

Prior charts show the rampant complacency in the stock market currently which tells you a near-term top is at hand at anytime in the days ahead. During OpEx week, a Tuesday low typically leads to a hump day high so if stocks are soggy early Tuesday, you may see a rally as professional traders place money on a one-day trade. She is ripe to roll over. Positive news on the coronavirus (COVID-19) would obviously add a little more life to the market rally but the complacency is very telling. Negative virus news would act as a catalyst and flush stocks down the toilet considering the current set-up. 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.

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