The Daily Chartist: Momentum Still Matters

Even though Friday's rally looks poor, momentum indicators are telling us this rally may have some life in it yet, the Chartist says.
Author:
Publish date:

Oct. 11, 1999

Admittedly, the raw statistics from Friday's big

rally look poor: The

NYSE

advance/decline line never even made it to positive territory. And the

Nasdaq

made a new closing high -- by just pennies -- but still had fewer than one-third the number of stocks making new highs than it had on its first trip to this high back in July.

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However, many of the momentum indicators that halted their slides and reversed their directions two weeks ago are not done yet. These indicators (all discussed in my

column of Friday, Oct. 1) were successful in timing the rally, and I believe we should wait until they tell us the rally is done.

Unless these raw data statistics improve markedly over the next few trading sessions, the momentum indicators, which are made up of the raw data, will begin to falter within a week or so.

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.