The Daily Chartist: Better Statistics Needed

Until this market gets some better statistics behind it, rallies will continue to fail, Helene Meisler says.
Author:
Publish date:

Aug. 19

The market remains in an oversold condition. Perhaps this is why Wednesday's selloff had such little downside momentum. Sure, the advance/decline line looked pretty poor at first glance. But if we take a closer look, we see that the

Dow

was up 70 on Tuesday and down 125 Wednesday, giving us a net loss for the two days of negative 55. And the a/d line was net 683 on Tuesday and negative 611 on Wednesday. That gives us a net gain of 72 for the two days.

In addition to that, the number of stocks making new lows actually contracted on a down day. This is the first time in quite a while that we've seen this sort of action: the a/d line actually underperforming on the downside and the new lows contracting.

Now if only we could get better statistics on rallies, this market would be in much better shape. However, until that happens, it is likely that rallies will continue to fail.

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 TheStreet.com. 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 any securities 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

KPMHSM@aol.com.