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April 27, 2006
SMH and the McClellan Volume Oscillator
Yesterday I highlighted the Semiconductor HOLDRS (SMH) and the bullish crossover in the McClellan Oscillator. This indicator is based on the advance/decline statistics and the bullish crossover signals a move from negative territory to positive territory. I also look at the volume based McClellan Oscillator or McClellan Volume Oscillator. This is based on the percentage of volume in advancing stocks less the percentage of volume in declining stocks. Volume based breadth stats give more weight to large-cap stocks because large-caps typically have more volume. In contrast, regular advance/decline stats give more weight to small and madcap stocks. The Semiconductor HOLDRS (SMH) is heavily weighted towards the larger cap stocks as Intel, Applied Materials and Texas Instruments make up around 50% of this ETF. Just three 3 stocks (out of 20) account for the majority of the ETF’s price change.
The McClellan Volume Oscillator moved into positive territory on Wednesday (green circle) and the components of this ETF continue to show strength. SMH already broke its 50-day EMA (gray oval), but the McClellan Summation Index (volume based too) remains below its 20-day EMA (red circle). The big break for SMH will come when the McClellan Summation Index moves above its 20-day EMA. Stay tuned and checkout ETFInvestmentOutlook.com for the latest breadth charts (click here)
Posted by Arthur B. Hill at April 27, 2006 12:07 PM