Guy S. Ortmann, CMT | Jan 21, 2022 11:04AM ET
McClellan OB/OS & Stochastic Levels Strongly Suggest Relief
The major equity indexes closed lower Thursday with negative internals on the NYSE and NASDAQ as trading volumes rose on both exchanges as recent selling pressure persisted. All closed at or near their lows of the day with all but one closing below their respective support levels.
As such, all remain in near-term downtrends and have yet to show signs of a reversal of recent weakness via price and trend. However, we are now of the opinion that some relief may be on the horizon as the stochastic levels on the charts are in low single digits that have been coincident with rallies of import multiple times over the past year. As well, the 1-dayMcClellan OB/OS Oscillators are just shy of being extremely oversold as the rest of the data remains neutral. So, while the bears have been pounding the bulls of late, we are seeing stochastic and OB/OS levels that suggest some relief of recent pressure may be in the offering.
Should the indexes manage to close positive today after a weak open, that would tend to support our speculation of said relief.
On the charts, the major equity indexes closed lower yesterday with negative internals as trading volumes rose from the prior session.
The data finds the McClellan 1-Day OB/OS Oscillators are just shy of being extremely oversold, sending a similar signal as the stochastic readings (All Exchange: -93.38 NYSE: -98.7 NASDAQ: -91.86).
In conclusion, while yesterday’s slide continued the recent pain, leaving chart trends and breadth in poor shape, the magnitude of the recent selloff has pushed the stochastic and McClellan levels to points that preceded rallies of import multiple times over the past year. Should the markets close positive on the day, post a weak open, that would support our assumption of some relief.
SPX: 4,441/4,575 DJI: 34,707/35,784 COMPQX: 14,154/14,641 NDX: 14,778/15,324
DJT: 15,430/15,900 MID: 2,631/2,722 RTY: 2,000/2,140 VALUA: 9,386/9,524
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