Via Marketthoughts
The level of the McClellan Summation Index is obtained by summing up the daily values of the McClellan Oscillator.A market is termed “neutral” at the +1000 level; during a normal bull market, the Summation Index usually swings in between a range of 0 and + 2000.The significance of the Summation Index comes into play when the reading is outside the range of 0 and + 2000 – indicating an unusual situation in the stock market.For example, a bear market typically end with the Summation Index below – 1200.Long-term investors can typically buy stocks at such a level and expect to make outsized returns over the long-run.A strong rise from such an oversold level would further confirm the beginning of a new bull market.
A sharp rise is exactly what we have off the bottom, and this chart now has overbought written all over it. I don’t even understand how this could have possibly went up last week when all the markets were down, but it managed what could be viewed as an exhaustion move up.
