| Wag the Dog |
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| August 7, 2007 |
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Or in our case, wag the market, if that makes any sense at all! Volatility is on everyone’s mind lately, and for good reason. Take the last three market days. On Friday, the Dow dropped almost 300 points, only to turn around and climb almost 300 points on Monday. Just today, the Fed announces it is leaving interest rates alone, and the markets drop, then soar, and then even back out to finish the day up, all in the space of two hours.
What I want you to know — especially during this market’s state of spastic volatility — is that you do have more control than you may think. While others find themselves in a state of panic, you can sit back with relative ease.
How? Thought you’d never ask!
Normally, I’d ask you to join us at Trending123 first, but this is so important that I want as many people to know as possible. So we’re going to have a little “show and tell” here today because there are several key charts that are giving away the answers to why the market has been acting the way that it has.
First up: The $NAHL (Nasdaq New Highs-New Lows)
You can go all the way back to 2003 on this chart but if you look at where the market is right now, what do you see? This is the worst it’s ever been—in four years!
Second: The $NAHLR (Nasdaq New High/Low Ratio)
Okay, on this one, I just want to point out that we have taken out the internals from where we were back in March. And to boot, we haven’t seen new highs since February.
Third: $NALOW (Nasdaq - New Lows)
What I am about to tell you is so important that I want you to write it down! Here goes: the Nasdaq New Lows just made 52-week highs! But it not only took out 52-week highs…it took out the highs from 2006, the highs from 2005, the highs from 2004…you’d have to go all the way back to 2002 to get as many new lows as we are seeing right now!!!
Lastly—and MOST IMPORTANT OF THEM ALL: $NAMO (Nasdaq McClellan Oscillator)
As I wrote on the chart itself, every time we hit the blue line, we have had massive bull runs. And you can see by the yellow arrows where we have hit the line before and in each case have indeed had massive bull runs.
And now where are we? We are so incredibly close to the line.
I’m not sure you understand how significant this all is.
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The McClellan Oscillator
When the market tanks, how do you know if you’ve hit the bottom? No one can always be sure, but there are tools you can use to get an idea. One of them is the McClellan Oscillator.
The McClellan Oscillator is named for its developers, Sherman and Marian McClellan. It is based on daily market breadth, or the difference between the number of issues that advanced (closed higher) and the number of issues that declined (closed lower) on a given day. This can fluctuate a lot, so to make the data more useful and reliable, the McClellans created an oscillator subtracting the 39-day exponential moving average (EMA) of the daily breadth from the 19-day EMA of the daily breadth. If the result is a positive number, that means advances are winning out. If the result is negative, that means declines have taken over. Additionally, the closer the McClellan Oscillator is to 100, the more likely the market is overbought, and the closer it is to -100, the more likely the market is oversold.
Earlier this year, the Nasdaq McClellan Oscillator (NAMO) just hit a new low. Including that low, we’ve only seen numbers like this four times in the past decade, and each time they preceded a major market rally. Now, we’re about to hit it for the fifth time — and my Trending123 subscribers and I are getting ready to start racking up some big profits. Don’t miss out on the buy alerts—click here to join now.
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This means that we are going to go crazy for longs. If you think that the handful of stocks I have recommended thus far (if you don’t know what they are, click here now) are all I have in my arsenal, boy oh boy, are you wrong! We are nowhere near capacity.
The flood gates are going to open soon and I’m going to let out a crazy number of new buy alerts. So, no new trades for you to make this week, but get ready — because we’re fixing to go on a buying spree!
You do not want to miss out. It’s going to be fun. And if I have my way (as I have many times in the past), it’s going to be profitable!
Sincerely,
John Lansing
Trending123
P.S. What kind of incredible gains am I talking about? How ‘bout these beauties: Suncor Energy — up 20.51% in 1 month, Air T, Inc — up 39.33% in 30 days, Central European Distribution, up 49.49% in 3 months and Phazer Corp, up 79.41% in just over 1 month! It’s about time you start profiting too, don’t you think? Click here to begin!
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