Indicators Heading Higher

I know it's anecdotal but I think more folks were dying to buy the market at every dip in September and early October than are dying to buy it now. My inbox continues to be filled with folks wanting to either know when the rally will be over (it just got started!) or they are annoyed at me because we didn't get a whack on Thursday and/or Friday. As I said last week, I am a buyer of dips and not a shorter of rallies now.

The intermediate-term indicators have turned up. The 30-day moving average of the advance/decline line remains oversold. The McClellan Summation Index has turned up and now has quite a cushion should we fall a few percentage points on the downside. In fact, the net differential of advancers minus decliners on the New York Stock Exchange would have to be worse than a net negative 4500 for this indicator to turn back down. And if you squint hard enough you can see its even making a minor new high that it was two weeks ago.

Upside volume as a percentage of total volume on a 30-day moving average remains in the 40% area, where we tend to get rallies from. The 30-day moving average of the equity put/call ratio is heading down (bullish) and the 21-day moving average of the ISE equity call/put ratio is heading up (bullish).

In the shorter term, the oscillator I show here each day also is still not yet overbought.

Does this mean there is nothing to worry about? Heck no. Of course there is. Jim Cramer once said the market is not a sofa, it is not a place to get comfortable. He's right. We don't need to get comfortable and we should be aware of the problems out there, but for now I think the downside is contained. However, since you all seem more intent on fretting over the negatives than the positives, I'll even share with you what you can fret over.

There's the new highs. They stink. I can't think of another adjective to use for them. Four new highs on the NYSE after a 20% rally? Blech!

Volume sure isn't anything to write home about.

The cumulative advance/decline line lags in a big way. The utilities couldn't find it in their hearts to participate last week beyond one day. The folks responding to the Market Vane survey, which tracks the percentage of bulls among traders, is back at 43%, a reading that was last seen in mid-August near the market highs, and was the high tick reading for the July rally.

So there are your list of negatives. But I am a slave to the indicators and when the intermediate- term indicators curl upward as they have I find the downside tends to be contained. When they are heading down the upside tends to be contained. You might recall I wrote several times in September how the problem we had with looking for upside was that the intermediate-term indicators were all heading down. It didn't mean we couldn't get rallies. We did. Plenty of them. But none lasted very long.

Now those same indicators are all heading up. It doesn't mean we can't get declines. To me it means declines are unlikely to last very long.

I'm certain there will come a time when the indicators roll back over and I will fret about all the negatives out there. Right now I'd rather be a buyer of dips.

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At the time of publication, Meisler had no positions in any stocks mentioned, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information, click here. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.