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NYSE Oscillator

 
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arthur
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PostPosted: Fri Mar 25, 2005 2:25 pm    Post subject: NYSE Oscillator Reply with quote

Data for the NYSE Oscillator (available only since May 1998) show it closed below negative 50 on a daily basis at least 24 times, closed below negative 100 on a daily basis three times, and closed below negative 50 on a weekly basis at least nine times. The methodology below is not scientific and based on crude estimations.

The first two same period charts show the over 24 times the Oscillator closed below negative 50 on a daily basis and the SPX daily chart. The exact SPX data aren't presented. However, each time the Oscillator was severely oversold, it moved into neutral or overbought territory within a short period of time and the Oscillator is generally positively correlated with SPX.

The next two same period charts show that each time the Oscillator closed below negative 50 on a weekly basis, SPX bounced 2% to 21% short-term. The third set of two same period charts show that the last time the Oscillator closed below negative 100, on a daily basis, SPX rallied 10 points, pulled-back, and then eventually rallied 3 1/2%, all within three weeks. The final two same period charts are current charts, up to Thu. The Oscillator's 10 day MA is negative 66, which is very much severely oversold.

Recently, SPX fell from 1,230 to 1,169, bounced to 1,180, and closed at 1,171 Thu. A 2% rise from 1,169 will take SPX to 1,192, which happens to be a major resistance level. If SPX rises to 1,192, then OEX will rise to roughly 569 (OEX closed just below 558 Thu). The Oscillator has been so oversold that SPX may rise to 1,192 within two weeks (the Apr options expire in three weeks). The bullish trend is still intact, while SPX holds 1,160, which is the multi-year Fibonacci 50% level (see bottom of page two of Chart Room).

Next week is a heavy economic data week: Tue Consumer Confidence, Wed revised GDP and revised Chain Price Deflator, Thu Unemployment Claims, Personal Income, Personal Spending, and Factory Orders, Fri Unemployment Rate, Nonfarm Payrolls, Hourly Earnings, revised Michigan Consumer Sentiment, ISM Index, and Construction Spending.

The market will be influenced by end-of-the-quarter window dressing, new money at beginning of the quarter, and earnings season, which starts in early Apr. There have been large amounts of money outflows from both stocks and bonds over the recent sell-off. Stocks may be more attractive than bonds, because inflation concerns will be more negative for bonds, although I tend to believe the Federal Reserve is "jawboning" to slow the economy, which, if successful, will avoid an actual ramp-up in money tightening.














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