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The Daily Chartist: A Recipe for Bullishness

Helene Meisler provides a list of factors that could end her current cautious market outlook.

May 24

Talk about lack of interest! Friday was an expiration, and it was such a low-volume day! Sure the market dropped, but on no volume and with very little conviction. Sorta the same way it tried to rally earlier in the week and couldn't get anywhere.

Since I've been asked quite often what it would take to make me bullish on the market these days, I've made a short list. First, we need to see some positive divergences on a down day. For example, the number of stocks at new lows should shrink vs. the last time the averages traded down. In this case, it means a break of last Monday's lows (in the averages) and fewer than 77 stocks making new lows.

Also, I'd like the overbought oversold oscillator to show a lesser oversold reading at the same time the averages were breaking those Monday lows, as this shows a lack of downside momentum. The cumulative A/D line would have to show a higher low on such a selloff as well.

Finally, sentiment needs to turn a bit more bearish. A reading over 60% for the bulls is not what I'd call bearish.

Unless some of those items listed above fall into place, it is likely this seesaw action will continue. Until there is a change in this trendless pattern, I remain cautious.

New Highs and New Lows

Overbought/Oversold Oscillator

Cumulative Advance/Decline Line

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in the stocks mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at