The Daily Chartist: Now That's What I Call a Healthy Rally

The Chartist says that last week's rally showed us what good statistics look like, especially in the financial sector.
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Oct. 25, 1999

Wowee zowee! Friday's

rally showed us what good statistics can look like. A close look at the rally tells us how important the financial sector is to a healthy rally. So many stocks are related to the financial group that when the sector acts well, the advance/decline line acts well, too. In fact, it shows us how much of a leader that group truly is.

What last week's rally has done for this group is help them to put in a low. It is likely these stocks have now seen their lows, which also means that any trip back down should provide us with fewer stocks making new lows.

Is the market's rally done yet? No. The market is still oversold and the more than 400-point rally in the

Dow

last week has hardly budged the oscillator, so I do believe the upside is not done yet. There is a somewhat complicated chart of the Dow I've included here. The downtrend line, which we find ourselves up against here at 10,500, may cause a small amount of resistance for the average, but it is my opinion that we will chew through that level before this rally is done. You may recall I showed this

chart in late September, depicting the Dow's breakdown from that channel. It is highly likely we will rally back to the underside of that broken channel on this particular run-up. That's in the Dow-10,800 area.

Dow Jones Industrial Average

Cumulative Advance/Decline Line

New Highs and New Lows

Overbought/Oversold Oscillator

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.