Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

McClellan Oscillator Bullish Divergence

by October 27, 2023
October 27, 2023
McClellan Oscillator Bullish Divergence

Two weeks ago, I wrote here about the McClellan Oscillator leaving a “simple” structure above zero, which said that the bulls were not (yet) in charge. The major averages since then have pushed to a lower low, even as seasonality says that the uptrend is supposed to be starting again now. But as prices have made lower lows, the NYSE’s McClellan A-D Oscillator is making a bullish divergence, which says that the energy is going out of the decline.

The McClellan Oscillator can be thought of as an accelerometer for the A-D Line. In mathematical terms, it could be said to be like the second derivative of the A-D Line, and its companion tool the McClellan Summation Index is like a first derivative. So when the Oscillator is negative, it says that the trend is down, and when it is really negative, it says that the trend has been accelerating downward at a rapid pace.

When the Oscillator makes a divergent higher low, by which I mean a less negative one, it says that the once steep downward acceleration is moderating, which can be a prelude to an upturn. It is easier for the bulls to take over once the bears start getting tired.

One problem with a divergence, either a bullish or a bearish one, is that it is only a “condition” and not a “signal”. Nothing says when such a condition has to matter, although old technical analysts will tell you that a condition will finally matter right after the moment when you give up expecting it to matter.

Stock prices do not have to start turning upward just because of a bullish divergence in the McClellan Oscillator. But it sure helps. We can even see a bullish divergence in a McClellan Oscillator calculated on the A-D data for the stocks in the Nasdaq 100 Index:

Not only is it a “local” divergence, with the latest reading being just slightly higher than that of 4 days prior, but it is also a divergence in a larger sense, as each of the successive down waves since the July 2023 price top has seen waning downward energy. The divergent higher low in late September 2023 did not matter enough to halt the overall decline, and there is no mandate that this now second higher Oscillator low has to lead to a price advance. But it does constitute more evidence in support of one. And historically, a double divergence like this, with a third bottom higher than the prior two, hints at a stronger move to come.

0
FacebookTwitterGoogle +Pinterest
previous post
Friday Feature: Fersken Education
next post
Watch the Unemployment Rate – It Could Change Everything!

You may also like

SPY and QQQ Recapture their 200-day SMAs –...

May 16, 2025

Take Advantage of Volatility

September 15, 2022

Sector Spotlight: Stocks Lining Up for a Strong...

June 26, 2023

Drilling Down Into Gold and Silver

January 13, 2024

RRG is Sending a Clear Message And Finds...

October 20, 2023

Top 5 StockCharts Features to Use Every Day,...

February 24, 2023

Sector Rotation Breakdown: Spotting Market Leaders Now

March 14, 2025

A NEW ERA of Growth Leadership?

November 22, 2023

A STRONG Week for Equities and Internet Stocks...

February 2, 2024

Follow the Money! New Earnings Tools + Data...

July 15, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump wins over lifelong Democrat autoworker with ‘big, beautiful bill’ vehicle loan tax benefit

      June 27, 2025
    • EXCLUSIVE: Trump admin takes action after massive fraud uncovered at agency Dems tried to protect from DOGE

      June 26, 2025
    • FBI investigating Iran strike leaker, Leavitt says: ‘They should be held accountable’

      June 26, 2025
    • SMCI Stock Surges: How to Invest Wisely Now

      June 26, 2025
    • NEW! 5 Significant Additions to Our Professionally-Curated Market Summary Dashboard

      June 26, 2025
    • ‘Presidential incapacity’: Senate Republican seeks paper trail of Biden’s autopen use

      June 26, 2025

    Categories

    • Business (8,316)
    • Investing (2,074)
    • Politics (15,824)
    • Stocks (3,172)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved