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The Daily Chartist: Giving Weight to the Unweighted Average

An oversold Nasdaq has The Chartist checking this indicator for signs of waning momentum.

Feb. 28, 2000

Once again the


is struggling to show signs of holding on the downside, with a posting of fewer stocks making new lows. And of course, it continues to be oversold. These are all factors in the search for a short-term rally in this market. But there is still one missing ingredient for this to be a real bottom: sentiment. There is not enough bearishness with regard to this market as there should be. For one, I don't believe I have heard anyone refer to it as a bear market; they simply dismiss it as the Old Economy. Sentiment is heading in the right direction, as last week there were fewer bulls and more bears, but a couple of percentage points in either direction is not enough to make a case.

Sure, I expect some sort of short-term bounce this week. After all, it is the end of the month on Tuesday, so a little window dressing may come about. But as we've seen for the past six weeks, rallies on the NYSE are not yet sustainable.



also remains on the oversold side of the ledger, but as I've said lately, the momentum there is waning as each push to new highs takes fewer and fewer stocks along with it. This is beginning to be seen in an indicator that has been a leading one for the Nasdaq -- the

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Unweighted Average


This indicator, derived from


and found in


each week, tells us the average percentage move for the average stock on the Nasdaq. Week after week, this indicator has persisted on the upside (similar to the cumulative volume chart I show each week), even during those two big down 10% weeks we had in January. In fact, you can barely see those drops on the unweighted chart. However, this past week, the indicator failed to make a new high along with the Nasdaq. Since this indicator has been a leading one, it would be a concern should this indicator fail to regain its momentum.

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 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