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April 26, 2006
Semis Coming to Life?
Each morning I review the breadth tables at ETFInvestmentOutlook.com. These sortable tables rank around 100 ETFs and Indices by the McClellan Oscillator, McClellan Volume Oscillator and changes in these oscillators. There is also an alert column to show when the McClellan Oscillator crosses into positive territory or negative territory.
In today’s table, the McClellan Oscillator for all three Semiconductor ETFs crossed into positive territory. In fact, these were the only ETFs/Indices with bullish crossovers. There were 14 ETFs/Indices with bearish crossovers. Keep in mind that that McClellan Oscillator is fairly sensitive and can gyrate above and below zero.
This is where the McClellan Summation Index comes in handy. The McClellan Summation Index is a cumulative measure of the McClellan Oscillator and it takes more than just one positive day to turn this indicator around. For the Semiconductor HOLDRS (SMH), the McClellan Summation Index moved above the 20-day EMA last week and this coincided with a trendline break in SMH (twice in fact). The trendline break is holding and I want to see more strength from the breadth stats to push the McClellan Summation Index into positive territory. This would turn the indicator bullish and I would then expect SMH to challenge its January high.
See ETFInvestmentOutlook.com for more details and charts (click here).
Posted by Arthur B. Hill at April 26, 2006 12:12 PM