Got the reversal- How long are the legs?

The McClellan Oscillator remains in bullish territory, We are seening a stall here at the upper trendline, a break above the line will be accompanied by a sharp move in price. Of course, the possibility exists for a minor pullback here, but upward momentum is very strong and pullbacks shoould be met with buying.

MCO for Monday July 27, 2009
Click to enlarge

MCO Reversal

Note this was originally posted on July 20, 2009 on my other blog by accident -- I've moved it over here just to keep the flow

The McClellan Oscillator has confirmed the reversal I anticipated in the last post. More importantly the 10% Index has again gone above the +500 level which indicates the market has farther to go on the upside.

We are a tad overbought here but it appears to me the market is crashing up.

What I mean by this is that it is doing the reverse of what it did in 2008 when the 10% Index kept penetrating the -500 level and the decline persisted after all attempts to rally. In my opinion the opposite is happening and all the forthcoming pullbacks should be considered as shakeouts.

The McClellan Oscillator for7/20/09
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Setup for a reversal

It's been a rugged four weeks but barring a deep plunge with lopsided advance decline stats a reversal looks like it's about to start. It's possible to see another price zig zag in the lower end of the range but given the overly negative sentiment numbers I doubt this will happen. Although it has taken up four weeks the correction has been rather shallow as the indexes follow the 200 day averages a bit lower. This has masked deeper corrections in individual stocks which is weighing heavily on the sentiments of individual investors. It appears everyone is looking for lower prices. This may not happen, the various technical indicators are signaling that the correction has been deep enough and long enough to sustain a rally for more than a week or two. July 15th is an anniversary date and a cycle point which should be a reversal higher.

The NYSE McClellan Oscillator
Click to enlarge