NYSE McClellan Oscillator ($NYMO)

• Charles Amadeus
• September 22nd, 2009

The NYSE McClellan Oscillator fell 74% to close at 10, initiating a downtrend and suggesting further market weakness. The $NYMO is a midterm breadth indicator useful for estimating market direction, and you can find more about it at Decision Point.

Although the $NYMO remains above the 0 mark, the downtrend is a short term bearish signal that does not encourage increased risk taking. Rather, raising cash by cutting losers and locking in profits is increasingly prudent until there are signs of recovery.

The primary trend remains strong, so buy the dip as sellers disappear and buying resumes. Keep some powder dry until momentum reasserts itself and watch for new leaders who breakout from the consolidation.