The McClellon Oscillator can be leading indicator of what’s to come and we’re back in negative territory as of yesterday. If the market is going to have any sustainable move to the downside, I’ve highlighted two areas where I think will have to be broken decisively. As of right now there aren’t many glaring weaknesses in this rally, but speculation is staring to run a little rampant among many solar, penny, and Chinese stocks.
The first breaking point is around the 8600 area, which would be near the intersection of two lower trendlines. The other area is the lower trendline that is forming on the McClellon Oscillator. Should that occur it would most likely take out the recent lows of this indicator and that should display sufficient selling pressure to let us know that this push lower could have lasting power. At least it should be more than a 3 day decline which is all this rally has given the bear so far….
If we break to the upside of this little consolidation pattern, all bets are off to how far we climb.
