McClellan Chart In Focus: Dow Stocks’ Behavior Says More Uptrend Ahead – By Tom McClellan


Dow Stocks’ Behavior Says More Uptrend Ahead

“This week’s chart argues for more rally yet to come.”

Chart In Focus

The market has rallied strongly off of the March 23 bottom, and the enduring question is whether it is a new uptrend, or just a snapback rally.  This week’s chart argues for more rally yet to come.

The DJI Oscillator Rising Index (DJORI) is something I came up with about 20 years ago.  It involves calculating a McClellan Price Oscillator for each of the 30 Dow stocks, and then evaluating whether each one is rising or falling.  The DJORI then reflects the percentage of the 30 Dow stocks which have a rising Price Oscillator. 

This indicator shows an extended condition when it gets above 80 or below 20.  It can go all the way to 100, or to 0.  And that is where the important message comes this week.  Seeing the DJORI get up to a 100 reading conveys a promise that there is more advance yet to come.  Important price tops for the overall market typically only come after a divergent lower high appears. 

We do not have one of those yet.  The DJORI has been bumping up against the 100 level like a helium balloon bumping against the ceiling.  No divergence is apparent yet, and so the implication is that there is not a proper top condition yet to end this rebound rally.  Such a condition could soon develop, but it is not here yet. 

The DJORI’s value is reported every day in our Daily Edition.

Tom McClellan
Editor, The McClellan Market Report

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About the author

Sherman and Marian's son Tom McClellan has done extensive analytical spreadsheet development for the stock and commodities markets, including the synthesizing of the four-year Presidential Cycle Pattern. He has fine tuned the rules for interrelationships between financial markets to provide leading indications for important market and economic data. Tom is a graduate of the U.S. Military Academy at West Point where he studied aerospace engineering, and he served as an Army helicopter pilot for 11 years. He began his own study of market technical analysis while still in the Army, and discovered ways to expand the use of his parents' indicators to forecast future market turning points. Tom views the movements of prices in the financial market through the eyes of an engineer, which allows him to focus on what the data really say rather than interpreting events according to the same "conventional wisdom" used by other analysts. In 1993, he left the Army to join his father in pursuing a new career doing this type of analysis. Tom and Sherman spent the next 2 years refining their analysis techniques and laying groundwork. In April 1995 they launched their newsletter, The McClellan Market Report, an 8 page report covering the stock, bond, and gold markets, which is published twice a month. They utilize the unique indicators they have developed to present their view of the market's structure as well as their forecasts for future trend direction and the timing of turning points. A Daily Edition was added in February 1998 to give subscribers daily updates on their indicators and also provide market position indications for stocks, bonds and gold. Their subscribers range from individual investors to professional fund managers. Tom serves as editor of both publications, and runs the newsletter business from its location in Lakewood, WA.